How a Bot is Changing Federal Tech Purchasing

A bot managed to clinch the final bid on a recent federal cloud contract, offering to work with an Amazon Web Services broker on an aspect of Cloud.gov for $2,866.

Sixty-nine offers from seven bidders in—and seconds before the bid closed—the bot named the lowest price in what may be the General Services Administration's first auction with significant bot activity, a spokesperson told Nextgov.

Bots are software applications that run automated tasks over the internet. The winning vendor had built an open-source bot hoping others would use it, but no one did, according to a blog post by GSA's digital consultancy, 18F.

18F has been experimenting with new ways to buy technology; one such project is an API that lets registered users bid on small, discrete coding tasks. That API lets agencies buy code from the vendor with the lowest bid, using the federal “micropurchase” process by which they can buy services directly if they’re valued at less than $3,500.

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Before the Cloud.gov contract, 18F was getting an average of five to seven bids per auction from three to five bidders. This time, there were 70 bids from seven separate bidders. Aside being a higher-profile task order than many of 18F’s others, this was the first auction to involve bots heavily, said the blog post.

In fact, bots from two vendors were bidding against each other, and also against the other bidders who were submitting their offers manually, the blog post said. The bots generally work like this: Vendors set a base-bid based on their valuation of the work, and then the bots automatically bid the prices down until it reaches that base, according to 18F.

Vendors have told 18F informally that being underbid by a bot can be “demotivating,” the blog post said. But the tech team plans to allow bots to continue bidding, though it’s considering some adjustments to the process that might even the playing field. These might include extending the bid window if there’s a last-minute offer, and increasing the minimum increments by which vendors can automatically underbid each other (it’s currently $1).

While 18F doesn’t want to prevent bot bidding, “we would like all vendors to be motivated and involved at the same time,” the spokesperson told Nextgov.

This isn’t the first time the micropurchase experiment has surfaced potential problems. In its first test-drive, bids opened at $3,499, but the winning bid was $1, according to 18F. (Vendors with the lowest bid automatically won the chance to work on the project—if they submitted a solution that met all criteria within 10 days, they would get paid.)

When it announced the platform, 18F said it wanted to see if it was “a sustainable way to engage small businesses and nontraditional contractors in the government space.”