The Department of Interior recently added three AI robotic process automation (RPA) tools, or “bots” as part of its ongoing IT infrastructure modernization efforts.

The trio, Bob, Bobby and Oz, will help prevent misclassification of IT purchases, such as those identified between FY 2022 and 2024. They will also fill administrative gaps created by ongoing staff reductions.

Background and Overview

The federal government tracks purchases through the Financial and Business Management System (FBMS) using User Product Codes (UPCs) combined with other line-item data used for proper classification. FBMS users select the UPCs via a drop-down menu or a manual search of 10,000 codes that includes 662 specifically requiring IT approval required under the Federal Information Technology Acquisition Reform Act (FITARA). Agencies, such as Interior, also require approval of acquisition strategies and plans for all IT investments and acquisitions above the micro-purchase threshold prior to the purchase 

Between FY 2022 and 2024, the agency averaged $1.9B in IT spending. A September 2025 Department of Interior Office of Inspector General (OIG) audit revealed that agency’s IT investments during that time were misclassified as “other” in the FBMS. Between October 2021 and July 2024, the found that of the more 190,289 DOI purchases valued at $26.1B, nearly 9,000 were classified under the agency’s most used UPCs – Other Professional Services, Other Administrative Services and Other Management Support Services. Based on these findings, the OIG reviewed the purchase descriptions of 167 transactions under those UPCs.

The review revealed that 76% (98) were for IT-related products and services and which had not received proper approvals. This included obvious IT purchases such as software, Wi-Fi capabilities and IT consulting services, according to the report’s list of the agency’s most common IT purchases. The report cited the cumbersome UPC classification process along with a lack of guidance and training as contributors to the mistakes.

Such misclassified and unidentified IT purchases create spending tracking challenges for the federal government and industry, including:

• Inaccurate budgeting and forecasting data and underfunded critical programs
• Unreliable small business spending and performance metrics
• Noncompliance with agency and federal IT regulations and standards
• Difficulty identifying redundant products and services
• Potential purchases of malicious software and increased cybersecurity risks.

The OIG recommended that the agency evaluate and update all IT-related UPCs, streamline the FBMS code selection process, and develop a review and reclassification process of those purchases classified under “other” UPC codes. In response, the Interior Chief Information Officer (CIO) initiated an IT UPC update process to be implemented by March 31, 2026, with a fully updated list incorporated by September 30, 2026. Enter Bob, Bobby and Oz.

Implications for Federal Contractors

The bot trio will automate repetitive financial and backend acquisition processes to identify and categorize agency spending and track contracting goals. Continued process automation efforts, such as Intelligent Optical Character Recognition (IOCR) and the proposed FBMS UPC chatbot in the agency’s AI use case portfolio, will further increase efficiency, accuracy and data reliability. Anticipated improvements include:

• Increased contractor confidence through improved requirement transparency, more accurate understanding of agency priorities and stronger alignment between contractor offerings and agency needs
• Stronger contractor opportunity pipelines through predictable procurement timelines, quicker procurement processing, fewer administrative delays and faster contract awards
• Increased acquisition efficiencies from quicker responses to and processing of requests for information, questions and answers and documentation requests
• More reliable financial data through consistent data categorization and criteria application
• Increased small business opportunities driven by achievable small business goals and reduced risk of human error
• Fewer contractor and contracting office surprises during contract modifications, closeouts and audits from consistent application of rules and regulations (i.e., FAR clauses, small business compliance criteria and financial coding)
• Improved reporting in small business goal performance through more accurate spending categorization and consistent data analysis.

Conclusions

As federal contracting offices increasingly rely on AI, contractors must understand which acquisition functions are automated versus those completed by humans – particularly in areas such as proposal evaluations and subcontracting plan compliance. Firms should proactively assess their small business subcontracting plans to identify potential reporting delays, gaps or inconsistencies that may be flagged by Interior’s automated system. Firms who develop capabilities and explicitly demonstrate products and services that complement, integrate with or enhance agency automation capabilities will strengthen their competitive position. Finally, established strategic partnerships can fill capability gaps and extend firms’ competitive lead in an increasingly automated procurement environment.