Artificial Intelligence (AI) in Contracting: A Friendly Debate

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2 Artificial Intelligence (AI) in Contracting: A Friendly Debate Breakout Session #: CO3 John Dobriansky, MS, MBA, CPCM, NCMA Fellow Chris Robey, MBA, MPP, CPCM, NCMA Fellow Date: Monday, July 25 Time: 4:00 PM 5:15 PM

3 Administrative matters Introductions Debate format, rules, timing, voting, etc. Debate proposition: We welcome audience participation through Q&A and your vote! 3

4 Cautionary Note: Beware the Gartner Hype Cycle 4

5 What is AI? Artificial intelligence... is an evolving constellation of technologies that enable computers to simulate elements of human thinking learning and reasoning among them. AI Hits the Mainstream, MIT Technology Review, May

6 State of the art Typology Taxonomies, ontologies, folksonomies, tagging mechanisms and other techniques for organizing information How to represent knowledge in a way that an AI can use The beginning of wisdom is to call things by their proper names. Aristotle "Where we're going, we don't need roads." Dr. Emmett Brown, Back to the Future 6

7 State of the art Michael Mills 7

8 The Five Tribes of AI P. Domingos 8

9 What the AI agent is and is not Turing Test Disembodied Deep Learning Ability of a computer to refine its methods automatically and to improve its results as it gets more data -- E. Brynjolfsson and A. McAfee, The Second Machine Age Machine learning Based on algorithms that can learn from data without relying on rules-based programming -- D. Pyle and C. San Jose, McKinsey Quarterly, June

10 Deep Learning 10

11 Corporate players FB 10 year plan 11

12 Corporate players Startups 12

13 Corporate players - Avatars AI Division/ Avatar Parent Subsidiary Persona Amazon (internal) Alexa - Apple (internal) Siri Comment From SRI acquisition, original project funded by DARPA Baidu Baidu Research TBD? Silicon Valley footprint; working on speech recognition in English and Mandarin Facebook (internal) Messenger M - Google Deep Mind Google Assistant Acquired in 2014 $400M, UK talent pool IBM Watson TBD? Cognitive computing model Microsoft Microsoft Research Cortana XiaoIce avatar for China market Tesla OpenAI TBD? Open source, not for profit 13

14 Socializing the agent through contextaware avatars Anything you can do, I can do better... IPSoft Eliza, Amelia IT help desk avatars From customer engagement to workforce optimization Offshore BPO s being displaced Services going up the value chain 14

15 Socializing the agent through contextaware avatars You start with something simple, maybe just offering information, then you start doing transactions. We obviously want to automate everything, but you have to prioritize. -- Suresh Kumar, CIO, Bank of New York Mellon 15

16 Applications relevant to procurement Negotiation agent 16

17 Policy resource/adviser Natural language Q&A Access policy guidance from the Web Cognitive computing for USAF acquisition SBIR/STTR project based on IBM Watson Applied Research in Acoustics» Machine Interface for Contracting Assistance (MICA ) KalScott Engineering» SOPHIA Cognitive Computing Solution for Procurement 17

18 Policy resource/adviser Automated processes to support Requirements definition Systems engineering Risk management Benefits... over time I expect these types of tools can help people in the Air Force, government and industry better navigate what is a very complex bureaucracy. -- Dr. Camron Gorguinpour, Director of Transformational Innovation, USAF Office of the Assistant Secretary (Acquisitions) 18

19 Roles and missions Negotiation Agent-based Current SOA for supply chain algorithms in e-commerce and e-trading environments Game theory to avoid negotiation dead ends Blockchain tech to avoid repudiation of agent agreements by principals As agents become more sophisticated Where does legal responsibility for agent actions fall between website operator and principal? 19

20 Roles and missions Negotiation FAR 13 Simplified acquisition for commercial items through reverse auctions? Easy! FAR 15 Source selection through negotiation? Hard! AI will have a role to play in tradeoff process for cost/schedule/performance risk 20

21 Expanding domains Commercial labor force effects Drivers of Second Machine Age (E. Brynjolfsson and A. McAfee) Exponential improvement in computing through Moore s Law Large amounts of digital information Recombinant innovation McKinsey & Company Think activities, not occupations... as many as 45 percent of the activities individuals... perform can be automated by adapting currently demonstrated technologies. 21

22 Expanding domains C. Frey and M. Osborne ( Computerisation bottleneck Variable Description Creative Intelligence Originality The ability to come up with unusual or clever ideas about a given topic or situation, or to develop creative ways to solve a problem. Social Intelligence Social Being aware of others' reactions and Perceptiveness understanding why they react as they do. Negotiation Persuasion Assisting and Caring for Others Bringing others together and trying to reconcile differences. Persuading others to change their minds or behavior. Providing personal assistance... emotional support, or other personal care to others such as coworkers (or) customers 22

23 Expanding domains AWF labor force effects Commoditization of services to expand and extend to AWF Commercial AI research emphasis on SCM for services at boundary between clerical and professional tasks Analysis of job content for automation (C. Frey and M. Osborne - next slide) If Pr >.47, then occupation is a candidate for outsourcing Proxy measure for displacement by AI 23

24 Rank Probability Label SOC Code Occupation Purchasing Managers Management Analysts Financial Analysts Cost Estimators Administrative Services Managers Purchasing Agents, Except Wholesale, Retail, and Farm Products Accountants and Auditors Budget Analysts Billing and Posting Clerks Bookkeeping, Accounting, and Auditing Clerks Procurement Clerks 24

25 Conclusion... when all that is solid melts into air. -- Marx 25

26 Debate proposition: AI-driven business processes will make significant inroads into procurement activities within five (5) years, with major effects upon the acquisition workforce within ten (10) years. 26

27 References Slide Source 4 Gartner, Inc. 5 AI Hits the Mainstream, MIT Technology Review, May 2016 Michael Mills, "Artificial Intelligence in Law The State of Play in 2015?" 7 Legal IT Insider, November 3, 2015 Pedro Domingos, The Master Algorithm: How the Quest for the 8 Ultimate Learning Machine Will Remake Our World, Basic Books, 2015 E. Brynjolfsson and A. McAfee, The Second Machine Age, Norton, 2014; D. Pyle and C. San Jose, " An executive s guide to machine learning," 9 McKinsey Quarterly, June NVIDIA Corporation 11 Facebook Newsroom, April 13, 2016 Shivon Zilis, "The current state of machine intelligence 2.0," O'Reilly, 12 December 10, 2015 Jason Ankeny, Meet Amelia, the AI Platform That Could Change the 14 Future of IT, Entrepreneur, June 2015 Hugh Son, We ve Hit Peak Human and an Algorithm Wants Your Job. 15 Now What? Bloomberg News, June 8, 2016; The 3D Avatar Store 27

28 References Slide Source Yinping Yang, et al., Reducing Mistrust in Agent-Human Negotiations, IEEE Intelligent Systems, March/April 2014; U.S. Army Contracting 16 Command, U.S. Army Virtual Contracting Enterprise Christian Davenport, The Pentagon s procurement system is so broken 17 they are calling on Watson, The Washington Post, March 18, 2016 Maj. Dayan Araujo, Cognitive computers primed to change the Air Force acquisition landscape, Secretary of the Air Force Public Affairs, 18 August 3, Yinping Yang, et al, op.cit. 20 Yinping Yang, et al, op.cit. E. Brynjolfsson and A. McAfee, op.cit.; M. Chui, J. Manyika, and M, Miremadi, Four fundamentals of workplace automation, McKinsey 21 Quarterly, November 2015 Carl Benedikt Frey and Michael A. Osborne, The Future of Employment: How Susceptible Are Jobs to Computerisation?, Oxford 22 University and the Oxford Martin Programme, September 17, Frey and Osborne, op.cit. 24 Frey and Osborne, op.cit. Murray Nicol, "What can we expect from the next industrial 25 revolution?" World Economic Forum, September 10,

29 Contact Information John Dobriansky Chris Robey