Artificial Intelligence (AI) for financial reporting and audit processes

The Defense Logistics Agency (DLA) is conducting a commercial solutions opening (CSO) authorized by 10 U.S.C. - 3458 and Defense Federal Acquisition Regulation Supplement, Subpart 212.70,?Defense Commercial Solutions Opening.? DLA intends to solicit Solution Briefs in response to the addendum Areas of Interest (AOIs), which DLA may change, amend, open, and close from time to time at DLA's sole discretion.? Interested offerors are encouraged to frequently check this CSO from new or revised AOIs.? DLA intends to keep this CSO SP4701-25-S-C004 open until April 10, 2025, 11:59 PM EDT; however, DLA reserves the right to close this CSO at any time. In accordance with 10 U.S.C. - 3458(c)(2), any contract or agreement DLA may award under pursuant to this CSO shall be fixed-price.? DLA intends to award commercial contracts in accordance with DFARS 212.7002(b); however, DLA may, at DLA's discretion, to award an other transaction agreement in accordance with 10 U.S.C. - 4022. ?If you have any questions or concerns, please contact: Mr. Thomas Walsh? Agreements and Contracting Officer DLA DCSO-P5 Thomas.Walsh@dla.mil Mrs. Lauren Runowski Agreements and Contracting Specialist DLA DCSO-P5 lauren.runowski@dla.mil Solutions Briefs are due no later than April 10, 2025, 11:59 PM EDT. Please submit the Solution Briefs via email to Thomas Walsh Thomas.Walsh@dla.mil and Lauren Runowski lauren.runowski@dla.mil 1.0 Problem Statement The Defense Logistics Agency (DLA) seeks innovative solutions leveraging artificial intelligence (AI) to enhance the efficiency and accuracy of its financial reporting and audit processes. As one of the largest government agencies, DLA undergoes annual financial statement and control-based audits. These audits are time-consuming and resource-intensive, often requiring manual review and analysis of large volumes of data to support complex assertions such as the completeness and accuracy of inventory balances. DLA is pursuing transformative, high-impact solutions to streamline these processes, resolve existing material weaknesses, improve audit quality, and reduce the burden on its personnel. 2.0 Background DLA manages the end-to-end global defense supply chain - from raw material to end user disposition - for the five military services, 11 combatant commands, other federal, state and local agencies, and partner and allied nations. DLA's mission is to - deliver readiness and lethality to the Warfighter Always and support our nation through quality, proactive global logistics. The purpose of this call to industry is to attract and identify best-of-breed solutions to address the problem set and meet operational capabilities.? This aligns with the objectives set forth in Sec. 1007 of the Fiscal Year 2025 National Defense Authorization Act, which underscores the importance of AI technology in auditing financial statements within the DoD. With the increasing complexity of financial reporting requirements and the massive amount of data to be managed, DLA is looking to incorporate artificial intelligence (AI) into its financial reporting processes. DLA is committed to leveraging cutting-edge technology to optimize its operations and ensure the highest level of transparency and accountability in its financial reporting, enhance its decision-making abilities, identify potential cost-saving opportunities, and improve the overall effectiveness of its financial management. 3.0 Desired Solution Features 3.1 Phased approach to demonstrate the potential of AI, focused on financial reporting and audit processes prioritizing features, that offers the greatest potential for impact while minimizing initial development complexity. 3.2 Develop and demonstrate a prototype solution that resolves potential Pain Points, addresses Operational Capabilities, or presents a new approach: Pain Points: Time-consuming and resource-intensive processes Manual review and analysis of large volumes of data Potential for human error in identifying anomalies and discrepancies Difficulty in identifying and addressing potential errors and accuracy 3.3 Establish a feedback loop within the prototype to enable continuous improvement of the proposed solution. 3.4 Vendors must have solutions that are at the IL4 level and be FEDRAMP Moderate certified with 90 days of award. However, it is expected that an offeror can achieve IL 5 level and FEDRAMP High certification. 4.0 Project Expectations? 4.1 In 12-16 weeks, iteratively demonstrate phased approach to how solution will address operational capabilities below, or another critical capability, demonstrate potential for scalability and adaptation to other financial processes or components in future phases. 4.2 Demonstrate the envisioned AI capabilities that should lead to addressing operational capabilities listed below, a significant reduction in manual processing errors, substantially faster reporting times, and/or more insightful analytics capable of detecting irregularities. 4.3 Hosting - Initial prototypes could leverage vendor hosted environments. This is dependent on technical details of the hosting environment and cybersecurity controls in place. NOTE: Any long-term hosting in a vendor environment (i.e. Software as a Service SaaS) would require FedRAMP authorization. Additionally, DLA operates private cloud environments leveraging major providers (Azure, AWS, etc.) that can host vendor solutions once appropriately vetted. Offerors are encouraged to submit solution briefs that outline how their solution is currently hosted and describe the level of effort to meet DoD cybersecurity standards. 4.4 Solution providers should expect to participate in a shared development space with other vendors and government developers to rapidly deploy, monitor and iterate upon solutions. Solution providers may be asked to collaborate and/or participate in cross-functional efforts and/or in a teaming arrangement. The government intends to identify one or more integrators as a solution provider, but vendors are also welcome to team with integrators prior to submission. 5.0 Operational Capabilities Here are some major categories that are currently impacting the DoD audit results. Please note that this list is not exhaustive. Feel free to select a category from this list, but if there are other areas that may be advantageous for DOD in achieving a clean audit, consider those as well. 5.1 Unresolved accounting issues and material weaknesses in internal controls that cause DoD to be unable to provide sufficient evidential support for complete and accurate financial statements on a timely basis. Incorporate natural language processing (NLP) capabilities to allow for efficient data entry and report generation. Refer to the report on independent auditor's link. (https://comptroller.defense.gov/Portals/45/Documents/afr/fy2024/4-Financial_Section.pdf). 5.2 Modernize policies, procedures and internal controls surrounding documentation of procurements, shipments, and other movements, tracking of inventory by owner, validating the perpetual inventory systems by performing periodic physical counts, accumulating cost of inventory and supporting inventory balances and transactions. 5.3 Reconcile the activity that impact the Fund Balance with Treasury (FBwT) between the general ledger and the US treasury. 5.4??????? Update financial systems to substantially comply with The Federal Financial Management Improvement Act of 1996 (FFMIA). 5.5 Design and implement internal controls related to the following six areas. 1) Access controls 2) Configuration Management 3) Segregation of Duties 4) Security Management 5) Information Technology Operations 6) Interfaces. 5.6?????? Support the valuation, existence and completeness of general property plant equipment (PP&E). 5.7 Implement processes to comply with the Statement of Federal Financial Accounting Standards 54 (Leases). 5.8 Account for, manage, or report Joint Strike Fighter Program government property, which is composed of Global Spares Pool assets, or accurately record this property in an accountable property system of record. 5.9 Support the completeness and accuracy of environmental liabilities recorded in the financial statements. 5.10 Establish balances and implement a DoD-wide procedure to monitor, report, and ensure DoD Components have complete and accurate beginning balances. 5.11 Develop a method to research and correct the underlying problems that result in unsupported journal vouchers. 5.12???? Obtain from accounting systems the support necessary to reconcile trading partner differences in accounting (Revenue and expenses, accounts payable, accounts receivable, etc.) 5.13 Eliminate excessive manual preparation of the annual financial report (to include note disclosures and background information). 5.14 Aggregate all DLA inventory data into a single system and reconcile the data to all feeder systems real-time, thereby supporting the assertions of accurate and complete perpetual inventory which can be queried DoD-Wide with mil-service partners. Refer to attachments for directions to submit a Solution Brief and additional information regarding the Area of Interest and requirements