One important direction of Federated Foundation Models (FedFMs) is leveraging data from small client models to enhance the performance of a large server-side foundation model. Existing methods based on model level or representation level knowledge transfer either require expensive local training or incur high communication costs and introduce unavoidable privacy risks. We reformulate this problem as a reinforcement learning style evaluation process and propose FedGRPO, a privacy preserving framework comprising two modules. The first module performs competence-based expert selection by building a lightweight confidence graph from auxiliary data to identify the most suitable clients for each question. The second module leverages the "Group Relative" concept from the Group Relative Policy Optimization (GRPO) framework by packaging each question together with its solution rationale into candidate policies, dispatching these policies to a selected subset of expert clients, and aggregating solely the resulting scalar reward signals via a federated group-relative loss function. By exchanging reward values instead of data or model updates, FedGRPO reduces privacy risk and communication overhead while enabling parallel evaluation across heterogeneous devices. Empirical results on diverse domain tasks demonstrate that FedGRPO achieves superior downstream accuracy and communication efficiency compared to conventional FedFMs baselines.
A Contract Theory based Incentive Mechanism for Federated Learning
Software College, Northeastern University（东北大学软件学院）；Singapore University of Technology Design（新加坡科技设计大学）；Nanyang Technological University（南洋理工大学）；Joint NTU-UBC Research Centre of Excellence in Active Living for the Elderly (LILY)（南洋理工大学-不列颠哥伦比亚大学老年活跃生活联合卓越研究中心（LILY））
