Yelp for government contracting? Procurated launches Canary

Despite funding many of the most significant scientific and technological breakthroughs in history, the U.S. government at all levels is not especially known as a leader in adopting new tech.

Case in point: government contracts and procurement. Though many government agencies now post “requests-for-proposals” online — documents that invite private contractors and vendors to submit applications to receive government contracts and carry out projects — the process for government agencies wading through the submissions is often still largely manual. Same with evaluating the contractors for their fitness for the job.

But one company, Procurated, launched in 2019 to offer a better method: an online tool that effectively acts as a “Yelp” for government agencies at the federal and state levels, allowing them to search and see reviews and scores of vendors they’re considering.

Now, thanks to its new AI-powered platform Canary, Procurated is also giving agencies the ability to aggregate hundreds of reviews on each potential contractor, or supplier.

The tool also automatically alerts agencies when there is a problem with a supplier.

Firsthand experience with the difficulties of government procurement and vetting

“[Canary] alerts the procurement staff centrally in a state, city, county the moment there’s a problem with one of their hundreds or thousands of vendors, so they can address the issue early on and make sure that taxpayer money is being spent responsibly and that the people who government is supposed to be serving are served well, because their vendors are performing at a level that is expected of them,” explained founder and CEO David Yarkin in an interview with VentureBeat last week.

Yarkin knows the difficulties government agencies face when wrangling suppliers firsthand: he previously worked as the Deputy Secretary for Procurement for Pennsylvania, helping manage the state’s $4 billion spend on goods and services.

“We did some really terrific things, but there was one thing that just bedeviled me that I had no answer for, and it was massively important: the way that we vet our suppliers,” Yarkin told VentureBeat.

At that time, Yarkin said, in the early 2000s, the primary process for evaluating suppliers was asking them for three references. As any individual job candidate knows when asked for references, you typically select those who speak most highly of you — not necessarily those who are most honest, trustworthy, unimpeachable or fair in their reviews.

“We know that that companies do make mistakes, and there are issues that happen,” Yarkin said. “And what we really want in procurement is not just some reference cheerleading for them. We want to understand when suppliers have had issues, how do they rectify them?”

After leaving the state of Pennsylvania, Yarkin founded a consultancy company, but as time went on, founded himself haunted by the obviousness of the problem facing agencies and lack of a solution — despite the fact that one seemingly existed in the form of online review tech like that pioneered by Yelp and others.

“I thought to myself, you know, surely if I can read, you know, 4300 reviews of a cheesesteak place in South Philly, as important as that is, I should be able to read reviews about a supplier that I’m making a $20 or $30 million contract award to,” he told VentureBeat.

Canary enhances supplier evaluation and monitoring with AI

Procurated’s Canary, a web app, delivers on Yarkin’s vision.

It uses AI to aggregate 47,000 reviews from public sector purchasers and supplier performance insights on 15,000 suppliers, giving each one scores on a 1-5 star scale, similar to other review platforms.

Specifically, each supplier gets both a national score and a state score, as the supplier’s performance may not be the same — and often isn’t — in all the places they do business. That makes sense, as different people and teams are working in different areas, and some may be better at getting the job done than others.

“We’ll say the supplier is a 4.5 you know, across the country, and then we also will have a local score,” Yarkin told VentureBeat. “So if I’m the contract manager in Massachusetts, and the supplier has a 4.5 globally, but only at 3.2 in the state, that tells me there’s an issue.”

The reviews are themselves vetted and verified by Procurated as coming from government employees, checking their government email address.

“You probably read stories about how Amazon and other places struggle with this cottage industry of fake reviews,” Yarkin said. “We have no such problem, because every review is written by someone that we have taken the time to actually know that they are a verified government employee.”

In fact, Procurated’s community of users includes more than 106,000 unique government employees, though only 17,000 have taken the time to write reviews so far.

There are 295,000 supplier profiles on the platform, though many of those haven’t yet been reviewed.

In addition to scores and review summaries, Canary includes:

• Performance Review Dashboards: Visualizes performance trends over time, supported by real user feedback.
• Instant Risk Alerts: Notifies contract managers immediately of any reported poor performance, allowing for timely intervention.
• Asynchronous Business Reviews: Facilitates digital feedback and performance management, saving valuable time for procurement teams.
• Competitive Analysis: Enables data-driven decisions by comparing multiple suppliers’ performance on the same contract.

The features are powered by OpenAI’s GPT-3.5 and GPT-4. Procurated also says it has a system to safeguard against hallucination,

“We incorporate humans in the loop to combat hallucinations, adjusting the following parameters by use case,” wrote a spokesperson for the company in an email to VentureBeat. “A small percentage of outputs is reviewed by the head of the data team, with a larger percentage of outputs reviewed nightly by our offshore team.”

In the coming month, Procurated plans to deploy a retrieval augmented generation (RAG) system to further enhance their platform’s context processing capabilities.

State governments collectively manage a vast annual expenditure, and effective supplier performance management is crucial to ensuring value for taxpayers — worth some $2.2 trillion, according to Procurated.

That’s a lot of cash to keep track of, and Procurated thinks it can help agencies do a much better job than ever before with Canary.

Supplier-side benefits

But it’s not just government agencies that Procurated is courting with Canary.

It also offers a version of its service for contractors/suppliers as well, allowing them to see their own scores and how they compare to rivals in their area (though the rival data is anonymized to preserve privacy).

“We’re getting so much data from the governments in the way they write these reviews, it gives us the ability to feed them into open AI and to get really useful, structured but qualitative data that we can then share with the suppliers to help them understand how they’re doing and where the opportunities are for them,” Yarkin said.

Suppliers can use Canary to see not just how they stack up to rivals in their scores, but on which dimensions, such as inventory, customer service, pricing, and other factors — all plucked from structured qualitative data in reviews.

Suppliers are also how Procurated principally monetizes on a software-as-a-service annual subscription model, charged at a fluctuating rate depending on how much data they want access to from Canary.

Yarkin said Procurated has “a number of suppliers who are paying anywhere from a couple thousand a year, up to large enterprises who are paying $100,000 a year, and what we’re doing is providing them with all this robust data that really helps them see and understand their performance relative to their competitors, including performance on an account-by-account basis.”

By providing instant, AI-driven insights into supplier performance, Canary seeks to empower both state governments in evaluating suppliers, and suppliers in evaluating their performance relative to their competition. If works as designed, it should be a win-win-win for all parties involved: governments, suppliers, and Canary to reap the benefits.