Bellingham employee suspected of using AI to manipulate contract bid process
A city of Bellingham employee is under investigation over allegations that artificial intelligence was used to sidestep the competitive bidding process that’s legally required for government purchases and contracts.
Suspected government procurement fraud came to light last month as part of a joint investigation by KNKX-FM and Cascade PBS, according to a report that aired Monday and is published at the radio station’s website.
City of Bellingham spokeswoman Melissa Morin confirmed the report that was written by Nate Sanford of KNKX, a Seattle-based National Public Radio affiliate.
“Yes, we are conducting an independent investigation into this matter. I’m unable to share more information about the investigation, including who is conducting it, but I can share that there are no other state or federal entities investigating this situation that we’re aware of. There are no active lawsuits against the city on this topic,” Morin told The Herald in a Wednesday email.
According to the KNKX report, an unnamed city of Bellingham employee used ChatGPT to create an application process that would favor the purchase of software made by VertexOne of Houston for use in billing utility customers. VertexOne eventually was awarded a five-year, $2.7 million contract.
During the course of a KNKX investigation into how public agencies are using artificial intelligence, journalists received emails through a public records request that detailed the suspected fraud.
Bellingham Mayor Kim Lund said the employee’s actions were “unacceptable” in a statement that was provided to KNKX and shared with The Herald.
“We take very seriously our responsibilities to make fair, objective purchasing decisions and follow all local and state laws and policy requirements regarding purchasing and competitive bidding. Our initial assessment indicates there is more context than what’s available at face value, which is why we believe it’s important to do additional information-gathering and reserve judgment until we know more. To ensure we thoroughly examine these very serious allegations, we have initiated fact-finding with an independent investigator. We expect the investigation to be complete in early 2026,” Lund said.
Employees are trained in how to solicit contract proposals fairly and said that the city has “clear expectations” surrounding AI use, Lund said.
“Our process to develop and score requests for proposals (RFPs) includes many reviewers with expertise in purchasing laws and policies, knowledge of the city’s business needs, and expertise in the industry in which we are seeking services. We intentionally build many perspectives and safeguards into the RFP development and evaluation processes to reduce bias and promote a fair assessment of all applicants,” Lund said. “We will learn more about what happened once the investigation is complete. Regardless of the outcome of that fact finding, use of AI tools or any other actions to circumvent the city’s purchasing policies is not acceptable. We continue to train staff and set clear expectations around purchasing requirements as well as the use of AI.”
Bellingham is audited regularly by the State Auditor’s Office, as are all public agencies in Washington, Morin said. Those audits “indicate we meet legal expectations and best practices,” Morin said.
This story was originally published January 7, 2026 at 3:49 PM.
