OKLAHOMA CITY — Data mining and process mining software that uses artificial intelligence has been described as a game changer in terms of more efficient contracting by government agencies.
Officials say the relationship the state already had with the German company Celonis began paying dividends last year after Gov. Kevin Stitt issued an executive order for a comprehensive review of all state agency contracts to purchase supplies and services.
His order also called for the creation of a government procurement fraud protection unit and monthly reports on all “sole source” contracts awarded outside of a competitive bidding process.
The state Legislature’s Office of Fiscal Transparency raised questions last year about an institutional lack of oversight over state agencies’ “longstanding and unclear” contracting practices, which total billions of dollars annually.
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The state Office of Management and Business Services’ Risk Assessment and Compliance Division was established shortly after Stitt issued the executive order. Its director, Janet Morrow, said it was immediately apparent that the order posed an extremely serious challenge. Previously, she said, central procurement auditors were able to complete an average of eight agency audits a year, and their findings were often considered out of date by the time the work was done.
“Fortunately for OMES, a proof of concept had already been completed and Celonis had done the work to look at some government purchases,” Morrow said. “Celonis was contracted through a statewide competitive contract.”
Building on that relationship, OMES turned to Celonis to expedite reviews of thousands of purchases by government agencies.
“Celonis is a data and process mining platform that will go in and pull out the data that we ask it to — to review and analyze it for either process inefficiencies or identify data to investigate further,” Morrow said. “It’s almost like audit-type software, but it’s process and data mining.”
The main advantage is that the software allows for “course corrections” to identified inefficiencies in purchase orders that can be made in real time.
Celonis is not a new company, but previously it mainly worked on behalf of private sector companies. Morrow said he has also done work for the U.S. government to help improve the efficiency of defense logistics.
Software and other assistance provided by Celonis allowed the ambitious review Stitt commissioned to be accelerated. In just a few months, the same small government evaluation team was able to review more than 24,000 purchase orders totaling $4.58 billion.
Morrow said initial research indicated that outsourcing all the audits required by the executive order could cost the state more than $10 million. By leveraging the existing relationship with Celonis, that cost was reduced to $1.3 million.
Morrow said the savings are likely to be even greater.
“With a review of billions in spending, there has to be an opportunity to save tens of millions of dollars in taxpayer money,” she said. “The Director of State Procurement has (already) issued new internal procurement procedures based on the data we submitted. So it’s changing what have been guidelines for various agencies.”
More broadly, in response to last year’s LOFT report, the new OMES department made nine recommendations on how to make the government’s procurement system more efficient.
“We did (data mining) first, and now we want to do the process part from the perspective of ‘How can we be more efficient?'” Morrow said.
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