Are You Being Penalised for Using AI in Your Bids?

One question that I find myself answering more than any other is, are we going to be penalised for using AI to write our bids?

The Question That's Making Bidders Panic

If you've submitted a public sector tender recently, you've almost certainly seen it: "Have you used AI or machine learning tools, including large language models, to assist in any part of your tender submission?"

It's usually tucked in at the end of a tender, with no explanation of why it's being asked, what the "right" answer is, or what happens if you tick "yes."

There's no covering letter from the buyer explaining their intent. No guidance on what counts as AI use. No reassurance that your answer won't count against you.

So it's no surprise that so many businesses are worried. We hear the same thing every week: "If I say yes, will they mark us down?" "What counts as AI usage?" "Does using AI make our bid look lazy or dishonest?"

The anxiety is completely understandable.

When a question appears on a formal procurement document with almost zero context about why it's there, your instinct is to treat it as a trap.

But the reality is more reassuring than the question suggests. Let's look at what the evidence actually says.

What the Government's Own Policy Actually Says

That AI disclosure question doesn't come from nowhere. It originates from Procurement Policy Note PPN 02/24 (now updated as PPN 017), published by the Cabinet Office under the title Improving Transparency of AI Use in Procurement.

This is the official UK Government guidance on how contracting authorities should handle AI in the bidding process. And here's the line that matters most:

> "There are potential benefits to suppliers using AI to develop their bids, enabling them to bid for a greater number of public contracts. It is important to note that suppliers' use of AI is not prohibited during the commercial process." > — PPN 02/24 / PPN 017, Cabinet Office

The UK Government explicitly acknowledges the benefits of suppliers using AI and confirms it is not prohibited. The PPN goes further, comparing AI use to using a bid writer — something nobody blinks at in the procurement world.

The same note states that steps should be taken to "understand the risks associated with the use of AI tools in this context, as would be the case if a bid writer has been used by the supplier."

Here's the critical detail that most bidders miss: the PPN explicitly states that AI disclosure questions should not be scored. The example questions in Annex B are for information only and should not be taken into account in tender evaluation. You are not being penalised for saying yes.

> "The Questions included in this annex should not be scored or taken into account in tender evaluation, and should be used for information only." > — PPN 02/24, Annex B

The PPN also notes that AI usage is likely to lead to a general increase in bidding activity as suppliers use it to streamline their processes. In other words, the Government is already planning for a world where AI-assisted bidding is the norm, not the exception.

The UK Government Is Betting Big on AI — Including in Procurement

The PPN doesn't exist in isolation. It sits within a massive Government push to embed AI across every aspect of public service delivery and procurement. Consider the weight of evidence:

> "AI is at the heart of the UK Government's strategy to drive economic growth and enhance public service delivery." > — Government Digital Service, AI Playbook Launch, February 2025

The Buyers Are Using AI Too

Here's the part that often surprises bidders: the Government isn't just allowing AI on the supplier side. They're actively exploring AI on the buyer side of procurement too.

The Browne Jacobson analysis of AI in procurement noted that contracting authorities are already considering whether AI could be used to manage the increased volume of submissions that AI-assisted bidding will generate.

The legal commentary frames this as "fighting fire with fire" — if more suppliers are submitting AI-improved bids, authorities may need AI tools to process and evaluate them efficiently.

Across the wider public sector, AI is already being used for tasks like document analysis, compliance checking, and data processing. Tools like the Crown Commercial Service's recommendation system are using AI to make smarter agreement recommendations based on procurement data.

The Government's own AI Action Plan One Year On report, published in January 2026, confirmed that AI Accelerator Tenders have been developed to accelerate procurement and that an AI scan function in i.AI is now providing a "single front door" to companies.

In fact, we at mytender.io, are building and consulting on AI models for UK GOV and local councils to support them in leveraging AI for higher quality and more efficient evaluation of tenders, which tells you all you need to know about the public sector's views on AI.

The direction of travel is unmistakable: AI will be on both sides of the procurement table. The question isn't whether AI belongs in procurement — it's how quickly it becomes standard practice.

The US Is Moving Even Faster — And We Tend to Follow

The UK has historically followed US trends in technology adoption, and AI in procurement is no different. Across the Atlantic, the pace is remarkable.

In April 2025, the White House Office of Management and Budget issued two landmark memoranda — M-25-21 and M-25-22 — establishing a comprehensive framework for federal AI use and procurement. The stated goal is to adopt a "forward-leaning, pro-innovation, and pro-competition mindset" that makes agencies "more agile, cost-effective, and efficient." These memos direct every federal agency to remove barriers to AI adoption and require agencies to identify opportunities to use AI across their operations.

> "It is the policy of the United States to buy American and to maximize the use of AI products and services." > — OMB Memorandum M-25-22, White House, April 2025

So What Should You Actually Do?

The evidence is overwhelming: using AI in your public sector bids is not just acceptable — it's increasingly expected. But that doesn't mean anything goes. Here's how to use AI responsibly and confidently:

The Bottom Line

The "Have you used AI?" question feels intimidating because it arrives with no context. But the policy behind it is clear and consistent: using AI in your bids is not prohibited, is not penalised, and is explicitly acknowledged as beneficial by the UK Government.

The Government is using AI internally. They're spending record amounts on AI contracts. They're building AI into every aspect of public service delivery. The US is moving even faster. The entire direction of travel — from policy, from practice, from every credible source — points one way: AI is becoming a standard part of how procurement works.

The companies that will thrive in this new landscape are the ones that adopt AI early, use it responsibly, and combine it with genuine human expertise. The ones that will struggle are the ones still treating that disclosure question like a trick.

It isn't a trick. It's a transparency measure. And the transparent answer is: "Yes, we used AI. Here's how. And here's why our bid is better because of it."

---

Sources

• PPN 02/24: Improving Transparency of AI Use in Procurement, Cabinet Office, March 2024
• PPN 017: Updated version for Procurement Act 2023, Cabinet Office, February 2025
• AI Opportunities Action Plan, HM Government, January 2025
• AI Opportunities Action Plan: One Year On, HM Government, January 2026
• Artificial Intelligence Playbook for the UK Government, GDS/DSIT, February 2025
• Tussell UK Public Sector AI Procurement Tracker, 2025/2026 data
• OMB Memorandum M-25-21 & M-25-22: Federal AI Use and Procurement, White House, April 2025
• Browne Jacobson: AI in Public Sector Procurements, January 2025
• Trowers & Hamlins: The Future of AI in Public Procurement, February 2025
• Incubator for AI (i.AI), Government Digital Service, ai.gov.uk