Oklahoma saves time, money by using AI to review procurement data

In 2023, the Oklahoma Legislative Office of Fiscal Transparency, known as LOFT, had questions over whether state procurement officials were abiding by its Central Purchasing Act.

That law, which passed in 2009, was designed to standardize Oklahoma’s purchasing process and ensure anything bought for the state was subject to transparency, oversight and accountability, albeit with various exceptions. But the April 2023 LOFT report found that in FY 2022, state agency buying outside of Central Purchasing Division’s purview exceeded $3 billion, compared to $538 million that received central oversight.

Officials at the Office of Management and Enterprise Services, where the Central Purchasing Division is housed, were presented with a challenge. The agency, which provides various services to all other government agencies in the state, had to review all purchases made by state departments and had six months to complete that work. Gov. Kevin Stitt also issued an executive order mandating it.

To do that, OMES worked with Celonis, a company that focuses on what it described as process mining and process intelligence. The state made a digital copy of all 80,000 lines of procurement code contained in its database and fed it into the Celonis platform, then used a copilot driven by artificial intelligence to identify state purchases that had been marked exempt from central oversight and flag any issues.

After one year, the partnership has borne fruit. State officials and Celonis announced last week that the platform has helped identify more than $8 billion of purchases exempt from central oversight under law, identified $190 million in flagged purchase card transactions and over $5.5 million in purchases where agencies could have better controls and education in place for the future. The effort also appears to have satisfied LOFT’s requirements.

“It's provided a level of transparency that's never existed,” Janet Morrow, director of OMES’ Risk, Assessment and Compliance Division said in an interview. “It's providing real information live, because it is truly complete transparency of what the procurement process is and where the buyers are spending dollars. Also, it's given us opportunities for growth in how we manage our contracts.”

Morrow estimated that it takes between two and three years for OMES to manually complete an agency audit, whereas this whole process of auditing all 118 state agencies took 60 days using six employees, down from 12. The state also could have brought in an external audit firm to do the work, but that would have cost at least $14 million, Morrow said.

Before, a manual audit would require an employee to go into the state’s enterprise resource planning system to pull reports and contracts, then manually review them to see if they had been coded properly to reflect whether those contracts were sole-source, and whether the contract falls under the guidelines of Oklahoma’s Central Purchasing Act or was exempt.

The automated system now has created all the parameters that a contract would need to be analyzed for and automatically flags any for review. In most cases, such flags are a “misstep,” Morrow said, and now vendors can go into the system and correct any mistakes immediately.

The effort to use AI for procurement oversight comes as state officials nationwide have expressed excitement about the technology’s promise. Last year, the National Association of State Procurement Officials and the National Association of State Chief Information Officers released a report that said that the procurement process can be “slow and inefficient,” and that AI could help make it easier as long as government leaders are mindful of the potential pitfalls.

Morrow said AI can help employees focus on other tasks, and the platform is already being tweaked to show procurement officials when a statewide contract already exists for an item they are looking to purchase.

“When we launched the tool, it was a reactive approach,” Morrow said. “We were being told to audit the procurement so that we could show transparency and how the state spent taxpayer dollars. One of our biggest pieces when we started that process was, how can we be proactive?”

Morrow said the state is exploring other ways to be proactive with Celonis. That includes looking at how quickly it pays its vendors, if there are duplicative invoices, or even if payments are going out twice. OMES also has deployed it to its Workday software to identify how much time employees spend on tasks and find bottlenecks. Being good stewards of tax dollars is crucial, Morrow said.

“It's all about that single pane of glass and transparency of what we do as an agency, but also it gives our partner agencies the opportunity to look in so that they can operate their business better,” she said.