Government’s relationship with digital technology suppliers

Summary

Major digital transformation programmes have often failed to deliver as intended, undermining government’s ability to achieve its objectives and resulting in billions of extra taxpayers’ money being spent. Government faces major challenges to provide the improvement needed to address the problems that mean digital transformation programmes fail. It is struggling to modernise a legacy environment at the same time as harbouring a major ambition to exploit opportunities from new technologies such as AI, which could have an impact as profound as the Industrial Revolution.

Government cannot do this with in–house capability alone. Digital suppliers are critical to government’s plans and there needs to be a step change in how it approaches commercial and contracting arrangements, which are still geared towards large infrastructure programmes. The centre of government—through the Government Commercial Function (GCF) and the Government Digital Service (GDS)—needs strong thinking on the reforms needed, clarity on their accountabilities for driving change from the centre, and sufficient people with the capability to execute this on the ground. There are 6,000 people with mixed commercial skills across government, but only 15 digital experts in the centre of government dealing with the largest technical suppliers.

We are not yet convinced that GCF has recognised the scale of the reform needed to address long–standing issues in government’s digital procurement. The appointment of a new head provides an opportunity for GCF to step up to the challenge ahead and ensure that it identifies what change is needed and how it can best support this. With at least £14 billion spent on digital procurement across government, there is a need for urgency, and it is time for the commercial function to take this more seriously, particularly given the scale of change in digital technology, the increasing adoption of AI and the need to modernise legacy IT systems. Their acceptance of this position is essential before we can move on to the next stage of improving it.

Introduction

Government spends at least £14 billion annually with technology suppliers. Procurements for digital programmes involving major policy and business change are particularly complex because they must meet multiple requirements and work with wider policy initiatives, other programmes and existing systems and processes.

Departments and other government organisations are responsible for awarding contracts to and spending money with technology suppliers. At the centre of government, the Government Commercial Function (GCF), which is accountable to the Cabinet Office, leads public procurement policy. The Government Digital Service (GDS), which is accountable to the Department for Science, Innovation and Technology (DSIT), is responsible for government’s digital and data function but it does not have a formal role in respect of procurement. In January 2025, the government published its ‘Blueprint for modern digital government’ which acknowledges the need to reform digital procurement.

Major digital transformation programmes have often failed to deliver as intended, with repeated delays and cost overruns, because government has struggled to act as an ‘intelligent customer’. Digital services and the technology market are rapidly changing in nature and are increasingly underpinned by technology and services which are subscription–based and which government does not ultimately control.

Conclusions and recommendations

1. We are concerned that GCF does not yet recognise the scale of reform required to address long–standing issues in government’s digital procurement, including how it will work effectively with GDS to bring about necessary changes. Government has a long–standing need to improve its use of technology suppliers for major business change, and its existing ways of working have contributed to poor outcomes in its attempts to modernise and make government more efficient. It has also not adapted to the fundamental shifts in technology markets which are increasingly dominated by very large suppliers. GCF is a cross–government network of around 6,000 people who procure, or support procurement, of general goods and services. But it has only 15 people dedicated to the full–time management of technology suppliers given the pace of digital technological change needed to adopt AI and the significant shift from legacy systems to modern replacements, this number is simply not tenable. The GCF and GDS have important roles to play in improving government’s digital procurement, as will the new Digital Commercial Centre of Excellence that the government is setting up. GDS has not had formal responsibility for digital procurement in the past. This needs to change, but GCF and GDS have not yet set out how they will make this happen. With different parts of the Cabinet Office and DSIT responsible for different elements of digital procurement, and the new Centre of Excellence reporting to both Departments, it is also not yet clear who is ultimately responsible for delivering the improvements to digital commercial activity that government needs to make. We are concerned as to whether DSIT will have the authority to instil the change that is needed in most departments.

2. The Cabinet Office and DSIT have many expectations for the Digital Commercial Centre of Excellence to deliver the large–scale improvements needed to current digital commercial activities, as well as its existing aims. Government’s current digital commercial approaches and practices require improvement in a range of areas, including creating a clear sourcing strategy setting out what government wants and how it will procure it. Yet government does not have sufficient skills to manage the depth and breadth of its digital commercial needs. There is an insufficient level of digital commercial skills across departments, and some Departments do not make enough use of their digital expertise. The objective of the new Digital Commercial Centre of Excellence is to identify opportunities for further reform and improvements needed to enable tech startups, and small–and medium–sized enterprises to access government contracts. Cabinet Office and DSIT appear to have much more extensive and wide–ranging aims for the work of the Centre of Excellence. These include fully harnessing the capability of the digital and commercial functions; ensuring better data on technology spending; leveraging government’s buying power with technology suppliers; helping departments to optimise their use of the cloud; and digitally upskilling commercial staff across government. The Centre of Excellence will have just 24 experts to undertake its roles, compared to 6,000 mainly general commercial people working across government.

3. Cabinet Office and DSIT’s approach to preparing for the opportunities and risks presented by new technologies is not yet being developed alongside addressing more immediate digital procurement challenges. Government faces uncertain but profound technological changes, particularly around artificial intelligence, and rapidly needs to develop the skills to deliver the next generation of programmes for digitally enabled change and the significant task of replacing legacy IT systems with modern equivalents. At the same time, it needs to bring the skills of its people up to an acceptable standard to enable them to successfully deal with historic programmes and challenges from its legacy digital environment. Addressing the existing issues and challenges within government’s digital procurement will be critical to being able to successfully deal with emerging technologies in future, but government is not yet widely thinking in these terms. Cabinet Office does not yet have a plan for how it will develop the specialist digital skills or commercial capability required. The government has published a ‘digital, data and technology playbook’, but this lacks the level of detail needed to offer practical support to officials in departments undertaking procurements. GDS and GCF acknowledge that the playbook needs to be fit for purpose and expanded, to provide clear guidance across the commercial lifecycle and to reflect both the supplier and customer perspective. It intends to update the playbook accordingly.

4. GCF’s current plans for training to build digital commercial expertise across the civil service are insufficient to bring about the transformative change needed to improve government’s digital commercial activity. GCF acknowledges that government needs to do more to build digital commercial skills across the base and lift the whole level. Specialist skills needed include people with the experience and expertise to deal with the most senior commercial digital experts in suppliers and global ‘big tech’ companies. GCF’s examples of the general training and development programmes it is delivering to civil servants are not sufficiently targeted at delivering the digital commercial skills that government most needs. GCF accepts that more could be done but has not yet set out what that would look like in practice. We are also concerned that some bigger departments are better served with digital skills with the potential to work with their commercial teams than some of the smaller ones. But GCF could not say whether this needed a set of commercial people with digital skills in every department.

5. Government’s ability to get the best deals with technology suppliers is being hampered by its lack of knowledge of what it is spending or its future needs. Government estimates that it spends over £14 billion each year on digital commercial activity. But it cannot say for certain as it has no central record of this spending. Government also lacks reliable or comprehensive data on its overall pipeline of future demand for digital services and lacks the ability to evaluate this against suppliers’ appetite to provide those services. Cabinet Office considers that following the Procurement Act 2023, a new database will give government better data on spending and pipelines. However, this only supplies a platform for departments to submit data. It does not negate the need for systems and processes to be set up between the Centre and suppliers, and between the Centre and departments, to provide the forecast and pipeline data which is critically needed. Without reliable data, government cannot make informed buying decisions or fully make use of its consolidated buying power. Cabinet Office acknowledges that it needs an improvement plan to ensure it is capturing all available data on digital commercial activity in government. The Cabinet Office Permanent Secretary wrote to us after our evidence session saying that within 8 to 10 weeks the Government Chief Commercial Officer would set out to a plan and approach to upskilling his 6,000 staff in digital areas. We look forward to evaluating this.

6. Government is underestimating how difficult it will be to consolidate its buying power centrally when procuring digital technology across government, in a way that will give it maximum leverage. Spending over £14 billion annually on digital technology suppliers gives government considerable buying power and the potential to make deals that benefit the taxpayer. Historically, government has sought to exercise buying power through competition between technology suppliers. But the digital technology market is increasingly being dominated by a small number of very large suppliers, giving the government limited choice. GDS has a goal to support government to maximise its commercial leverage by moving beyond memoranda and frameworks to a position where different parts of government can commit to contracting with the same supplier. However, in practice it can be difficult to line up multiple customers with differing requirements. Government will therefore need to adopt wide–ranging changes to how it approaches digital commercial activity, which reflect the changing reality of technology markets. For example, it will need more clarity on how the centre of government and departments work together, and more focus on requirements developed in advance of contract awards. In dealing with cloud providers, it will need to more fully understand its negotiation levers and have the ability to commit money in order to have the best possible leverage.

1 Building a strategic approach at the centre of government

Introduction

1. On the basis of a report by the Comptroller and Auditor General, we took evidence from the Cabinet Office and the Department for Science, Innovation and Technology (DSIT) on government’s relationship with technology suppliers.¹

2. Government has many major projects and programmes which include some form of digital transformation requiring procurement relating to technology, digital capability and technology–enabled business change. It spends at least £14 billion annually with technology suppliers. Effective use of technology suppliers is critical to the success of the government’s ambition to improve and digitally transform its services and operations. Digital programmes are particularly complex because they must meet multiple requirements and work with wider policy initiatives, other programmes and existing systems and processes.²

3. The Cabinet Office currently has responsibility for all government procurement policy, including digital, and commercial training capability. The Government Commercial Function (GCF), which is accountable to the Cabinet Office, leads public procurement policy. In February 2025, the government appointed a new Government Chief Commercial Officer and head of the GCF. The Department for Science, Innovation and Technology (DSIT) is responsible for government’s overall digital strategy and for working with other government Departments to deliver it. The Government Digital Service (GDS), which is accountable to DSIT, is responsible for government’s digital and data function across government but does not have a formal role in respect of procurement. DSIT announced in January 2025 that it would start work on a new Digital Commercial Centre of Excellence, with the aim of harnessing the capability of government’s digital and commercial functions effectively.³

4. Departments and other government organisations are responsible for individual procurements and the programmes they relate to, including awarding contracts to, and determining how money is spent with, technology suppliers. Major digital transformation programmes have often failed to deliver as intended, with repeated delays and cost overruns, because government has struggled to act as an ‘intelligent customer’.⁴

The scale of the challenge

5. Government has a long–standing need to improve its use of technology suppliers for major business change, and this has contributed to poor outcomes in its attempts to modernise and make government more efficient.⁵ Both the Cabinet Office and DSIT recognised that almost everything that government does has a major technological, data or a future artificial intelligence component, and the pace of change in technology markets has been revolutionary. In a recent review DSIT recognised that “the government’s procurement and supplier management processes have not adapted to this market shift, impacting the performance and value for money achieved from the newly shaped supply chain.” ⁶ It is essential that GCF recognises the importance of DSIT’s lead in this area and that accountability and responsibility is agreed and shared.

6. DSIT explained that digital services and technology markets were increasingly dominated by very large suppliers and that the way in which technology supply chains wanted to charge, bill and work with departments had changed. It explained that buying had moved from a model of paying up–front for capital purchases to more subscription–based approaches. The Cabinet Office told us that it had seen a shift from “capital expenditure to much more agile resource expenditure” which had a massive impact on its approach to procuring and managing costs. It also told us that it had seen much more diversification in the services and the pace at which its supply chain wanted to work with it.⁷ DSIT had previously recognised that this has changed the balance of power in how customers and buyers need to interact with each other.⁸ This requires a fundamental shift of mindset from initial procurement through the whole life cost of the contract including upgrades and modifications. Government needs to employ and make use of people with the range of skills and capability to deliver this fundamental shift.

7. We therefore asked how government was keeping up with the pace of change in technology markets, and when we could expect a coherent strategy in response. DSIT recognised that there was currently a gap between the market in which it was operating and its approach and committed to publishing a sourcing strategy. DSIT similarly recognised that the technology market had shifted, and that sourcing in digital was “probably more complicated than it used to be”. It told us that it would need strategies for approaching different parts of the market. It explained that the big platform providers—those that provide, for example, cloud and office software—have different business models and incentives compared to the large system integrators and consultants that run projects and are different again from those who ship hardware. It noted that its approach to each of these would have to be tailored to their business models.⁹

8. Despite the technology market being dominated by large suppliers and changes in how they choose to negotiate and exercise leverage with government, we noted that GCF only had 15 people dedicated to the full–time management of the 19 largest technology suppliers. This compares to 4 in GDS. There are additionally around 6,000 commercial people in the GCF network across government, most of whom are not technical specialists and who are responsible for procuring, or supporting procurement of, general goods and services for government. GDS has not had formal responsibility for digital procurement in the past.¹⁰ We asked whether the voice of GDS was being heard clearly enough by the commercial team. GDS told us that “it is now. To be completely transparent, that close relationship has not always been in place.” ¹¹

9. To maximise the value obtained from digital procurements, departments need to ensure that digital people are sufficiently involved, as well as a range of project delivery, finance and legal teams. This entails more than just working collaboratively; it needs to address how digital expertise will have much greater input, accountability and responsibility.¹² We asked how government was managing the relationship between digital and commercial teams within departments and ensuring that they were aligned and fully integrated with one another. GCF acknowledged that between the commercial and digital functions, “sometimes there is a bit of tension there about the right way to do things and about different approaches”. DSIT acknowledged that part of its job was to “keep encouraging the whole of the commercial function to take this agenda really seriously, the same as we do on all sorts of aspects of this work across Government”.¹³ This seems to us that digital concepts are simply not well enough embedded in the GCF. Every time someone is recruited, they must have the right digital skills. Equally all 6,000 staff need to be trained so that they work closely with digital specialists to understand how to incorporate digital elements into new procurements.

10. We observed that it felt like procurement and digital commercial activity sits in a lot of places and different organisations. We therefore asked whether there was a clear sense of who was ultimately responsible for delivering the improvements to digital procurement that government needs to make, and whether Departments shared our concerns that procurement and digital commercial activity does not sit with anyone as a number one priority, and that there is therefore a lack of accountability. The Cabinet Office told us it could “entirely understand why you would draw that from the [NAO] report” and that “ultimately, the buck stops with the Cabinet Office, because we are responsible for all procurement”.¹⁴ However, the Cabinet Office also told us that the new Centre of Excellence will have “reporting lines” to both the Cabinet Office “and, ultimately to” DSIT.¹⁵ But ultimately the Centre of Excellence may only have an advisory role and digital procurement may still be led by non–digital specialists.

The new Digital Commercial Centre of Excellence

11. In January 2025, the government published its ‘Blueprint for modern digital government’. This announced the creation of a new Digital Commercial Centre of Excellence with an objective to “identify opportunities for further reform and improvements needed to enable tech startups, scaleups and [small–and medium–sized enterprises] to access government contracts.” ¹⁶ The new Digital Centre of Excellence will be staffed by experts in digital procurement. We asked the Cabinet Office how it would ensure that Departments and their commercial teams were able to get a consistently good deal that provides value to the taxpayer. It told us that it wanted the Centre of Excellence to bring together commercial digital procurement and enable departments and their commercial teams to have a stronger voice when working with suppliers. It also told us that it had “some strong ambitions to look at the whole digital landscape” and identify where it could buy better and more effectively.¹⁷ We believe this transformation is one of the most important in the whole of Government.

12. During our evidence session, the Cabinet Office and DSIT identified a range of other areas that they expected the new Centre of Excellence to contribute to. For example, the GCF recognised that it needed to do “a lot more” to refresh the digital, data and technology playbook, which it would do through the Centre of Excellence. DSIT told us that one of its priorities for the Centre was to jointly produce a clear digital sourcing strategy to steer Departments on when it makes sense to build things themselves, and when to buy from the market, as well as strategies for approaching different parts of the market.¹⁸

13. The Cabinet Office and DSIT told us that the role of the Centre of Excellence will include working further with departments, for example to help them produce much stronger forecast data on what they are intending to spend, and helping them optimise their use of cloud by avoiding over–purchasing and incurring unnecessary costs. DSIT explained that, through the Centre, it would be working with departments to get much stronger forecast data on procurement and digital spend. The Cabinet Office told us that it aimed for the Centre to help align departments on their requirements to enable government to leverage its purchasing power. DSIT similarly said that, through the Centre, it would need to make sure that departments were seeking to procure the right things and were not “overprovisioning or over–spec’ing what they need”.¹⁹ We are concerned that DSIT will not have sufficient authority over other departments to produce the scale of change needed.

14. We asked how government could manage its relationships with large technology suppliers, particularly given concerns about lack of competition or rising costs.²⁰ DSIT told us that it needed to build government’s capability in some specific areas of digital procurement, as activities such as “buying cloud brilliantly is a quite specific skill, even within the digital procurement set of skills”. GCF said that, as digital was now at the heart of almost every procurement, it needed to do more to build digital commercial skills, and that this was “absolutely” part of what the Centre of Excellence would do. It recognised that much of the more complex digital procurement was undertaken by multidisciplinary teams, so this would need a wider focus than only on commercial teams.²¹ The Cabinet Office wrote to us after our evidence session to tell us that new systems are predominantly “cloud first” and cloud computing expenditure was likely to always trend upwards to meet the priorities of the business.²²

15. The Cabinet Office said that the next step will be to fully staff up resource for the Centre of Excellence in DSIT and ensure that it has the capacity across digital and commercial teams to operate, which would be taking place in March 2025. It explained that the Centre of Excellence will have 24 digital experts, jointly working to both DSIT and the Cabinet Office to undertake all of the combined activities needed to fulfil the expectations for it that we were told about. The Cabinet Office told us that its expectation was the Centre of Excellence would be the “powerhouse” of a partnership between the two Departments, and that it would rely heavily on the input and expertise of GDS to develop the tools needed for the commercial function.²³

2 Actions to build and make use of digital commercial skills

Addressing the skills challenge

16. Government faces uncertain but profound technological changes, particularly around artificial intelligence, and recognises that it rapidly needs to develop the skills to deliver the next generation of programmes for digitally enabled change. At the same time, it needs to bring the skills of its people up to an acceptable standard to enable them to successfully deal with historic programmes and challenges from its legacy digital environment. GDS told us that often the challenges relating to legacy systems, and the ability to meet them, were not evenly distributed. It explained that some of the areas with the biggest challenges are often the teams who did not have the scale or skills to address them.²⁴

17. We therefore asked how DSIT intended to resolve the issues surrounding legacy digital systems. DSIT told us that the challenges of the legacy environment required many skills to resolve, not just digital skills, many of which were “very scarce”. It explained that resolving legacy issues was necessary in its own right, but was also needed to create the capability and capacity to be able to focus on the challenges that cutting–edge and next–generation technologies present.²⁵ DSIT told us that the challenge was both to “bring people up to an acceptable standard” and “rapidly move towards” being “able to deliver the next generation of programmes”.²⁶

18. The NAO found that Cabinet Office does not have a plan for how it will develop the specialist digital skills or commercial capability required. In an area as important as digital procurement, it found that it was essential that government had “a clear view of the skills it needs, the gaps and the actions required to fill them”.²⁷ We therefore asked what Cabinet Office and DSIT were doing to address that gap. Cabinet Office told us that it was looking at introducing annual capability assessments for every government function, and it was hoping to re–introduce departmental capability reviews to enable it to “understand what the landscape looks like”. When asked how long this would take, Cabinet Office said that it did not think that it would take a long time to implement, but that the harder thing would be to make it work effectively.²⁸

19. Cabinet Office also told us that it will work on a “comprehensive package of upskilling, capability and assurance” across the wider civil service to ensure that it could act as an intelligent customer. But it noted that this was an “ongoing challenge” and not a simple set of actions or that would result in change overnight.²⁹ We therefore also asked GCF what it was doing to make sure that all those 6,000 staff within the government commercial function have the digital skills they need. The new Government Chief Commercial Officer said he was new in post and referred to experiences from his previous departmental role about general digital upskilling of senior leaders.³⁰

20. We recognised that the Government Chief Commercial Officer was new in post but noted that it was reasonable to expect them to have considered how they intended to address issues surrounding digital commercial skills. We therefore asked how the new Government Chief Commercial Officer would bring the sea change needed. The Chief Commercial Officer agreed change was needed and recognised that while some areas already had “deep expertise”, the priority would be to “bring the floor of that experience up across the whole 6,000” and ensure that there was a “digital thread” across all commercial training in future. They committed to providing milestones showing what this would achieve, and by when.³¹ The Cabinet Office wrote to us after our evidence session to confirm that the Chief Commercial Officer would write to us within 8–10 weeks, to set out a plan and approach to digitally upskilling the 6,000 members of staff in GCF.³² Serious consideration should be given to the vast majority of new recruits in GCF having digital expertise.

21. The government has published a ‘Digital, data and technology playbook’, which sets out key policies and guidance for how digital projects are assessed, procured and delivered.³³ We asked whether this would be the primary tool for driving some of the change that was needed. DSIT described the purpose of the playbook as “how do we buy well and manage well” and that it would be a joint production with the digital sourcing strategy.³⁴ While the digital playbook required the technical feasibility of large–scale projects to be assessed, the NAO found that it contained limited detail on how this should be undertaken.³⁵

22. The GCF accepted that the playbook needed to be enhanced and improved, and said that in doing so it would involve GDS. It explained that its aim was to ensure that the playbook was “really fit for purpose”, in terms of where government wanted to move forward in the digital landscape.³⁶ GDS agreed that there were some areas that it would like to emphasise more, including: ensuring that there would be clear guidance on joint commercial and digital leadership for procurements; and describing how things should work across the lifetime of the relationship, not just up to the point of contracting. It also told us that it was considering including guidance about what departments should do when things go wrong, recognising that “no matter how well contracting is done, there are always problems”.³⁷ It also said of the playbook “we want to hear from the people we are working with as well. It has to be something that works with both sides of the market. We will also consult widely with Departments and seek general commercial expertise from industry, as in industry buyers as well as industry vendors.” ³⁸

Plans for digital commercial training

23. Providing appropriate training is a key element of developing the digital commercial skills that government needs. The NAO report found that government did not have training for digital commercial skills. It noted that in 2023, GCF launched a digital commercial development programme for senior commercial professionals, but that this focused on leadership skills, business acumen and commercial judgement. It also found that the programme was not co–authored with the digital profession and did not emphasise the need for specifically digital commercial skills.³⁹ This mindset needs to urgently change.

24. We therefore asked why this was the case, and whether this created a skills gap. GCF told us that “a significant amount of commercial training and development” went on across government. It explained that this was more general and applied to “all complex outsourcing and procurement services”.⁴⁰ GDS told us that a few departments that had been using cloud platforms for several years had their own strong (digital) training programme and curriculum, but that this was not universal across the system. GCF acknowledged that it had not developed examples of digital training within departments into training in core digital commercial skills across the whole community. Both the Cabinet Office and GCF accepted there was more for them to do. We therefore asked if they would give serious consideration to building digital commercial skills into future training. The Cabinet Office said that it would “definitely do that”.⁴¹

25. We asked the Cabinet Office the extent to which it felt that government was “moving from a basic digital world to an evolved digital world” and whether addressing issues with digital procurement, at the speed needed, could help this transition. The Cabinet Office agreed that “procurement and commercial teams can be a catalyst in the change that we have to make”. It accepted that it needed to both recruit some different skills, and to “step up the skills and the training programmes that we have.” It recognised that this needed to be a comprehensive package, and committed to coming back to us on this with more detail.⁴² GCF acknowledged that government needed to do more to build digital commercial skills across the base “lifting that whole level and making sure that it is consistent across government and all departments”. GCF accepted that more could be done, but did not say what that would look like in practice. For example, we observed that when we asked GCF what more it was doing to upskill people in the commercial field, they did not instinctively mentioned going to the GDS team for advice, support or building relationships.⁴³

26. We observed that our predecessor Committee saw examples where departments made mistakes in designing and procuring digital programmes, particularly where legacy technology was involved. We were concerned that some larger departments are better served with digital skills than some of the smaller ones, but that even in large departments this expertise is not always utilised. We asked whether there would be a set of commercial people with digital skills in every department. The Cabinet Office told us that it did not know. We therefore asked what government was doing to make sure every single department was up to speed. GDS told us that often, the challenges and the ability to meet them were not evenly distributed across departments, and that the departments with the biggest challenge were often the teams who did not have sufficient scale. It said that this was dependent on the size of a department’s digital estate, rather than the department’s size alone.⁴⁴

27. We asked whether government had the digital expertise needed to negotiate with suppliers and global ‘big tech’ corporations. The Cabinet Office told us that this was a “complex and big–scale set of challenges” and that the picture was “mixed”. It explained that it was confident that in the centre of Government there were some “incredibly senior, experienced people who spend a lot of their time on the big strategic suppliers”.⁴⁵ GCF told us that it had a “complex transactions” team of 20 digital experts that it can deploy to departments. When asked whether these experts were being deployed effectively, the Cabinet Office told us that this was “clearly dependent and clearly inconsistent”, and it would look into the example we raised.⁴⁶

28. Successful procurement programmes require departments to have digital commercial experts at senior level, and governance arrangements to ensure that senior leaders are equipped to understand the issues being raised and the options available to manage risks.⁴⁷ DSIT told us that the January 2025 Blueprint envisaged every organisation having a digital CDIO or otherwise sitting on their most senior departmental committee and their executive committee, and also having a digitally appropriate non–executive director on their board.⁴⁸ We noted that cultural change starts at the top, and we were concerned that government was not moving quickly enough to meet the pace of change the government needs to make. We asked the Cabinet Office and DSIT what they were doing to embed a culture that fully incorporates digital. The Cabinet Office told us that “we have to change the culture”. DSIT noted that the Blueprint identifies culture as one of a long list of changes that are required for improvement.⁴⁹

3 Chapter 3: Spending and buying power

Data on spending and the pipeline of supply and demand

29. Government lacks data on spend and the pipeline of supply and demand. Available estimates from third parties suggest that government spends at least £14 billion annually on digital procurement, but government has not been able to provide a more precise figure. There is also insufficient information about the pipeline of demand from departments for digital services.⁵⁰ The Cabinet Office accepted that, until government gets better at collecting such data in order to analyse it, then there would be inefficiencies within procurement, which cost money. The Cabinet Office accepted that government could do much more to bring together a plan for formally assessing government’s digital procurement needs.⁵¹ The NAO report highlighted that GCF did not have demand data from departments and only had data from some suppliers on spend. GCF told us that it did not consider that it had a lack of data across government, but acknowledged that the challenge was to pull together the data it collected and to analyse it as quickly and effectively as it would like, which historically it had not been able to do.⁵²

30. We asked how government was going to make better use of the data available on spending on digital programmes. Cabinet Office said that a new data platform was introduced in March 2025 to enable departments to provide better data on spending and pipelines. GCF explained that the central digital platform would give it access more quickly to the procurement data it needed. However, DSIT said that it would need to “build on” this and “add to it” with additional information from operational trends and investment forecasts.⁵³

31. The Cabinet Office is responsible for maximising the buying power of the state. We therefore asked the Cabinet Office how government could negotiate volume discounts with large suppliers or cloud suppliers, or aggregated contracts, without data on the expected future demand which GCF has been unable to do in the past. DSIT recognised that the data “gets weaker as we go out in forecast”. It told us that it would work with departments to get much stronger forecast data, using both investment forecasts from the upcoming Spending Review, and operational trends. It recognised that what people may be spending now, for example on AI solutions, will “not tell us perfectly what they are spending in the future unless we actually track that”. Nevertheless, without reliable information about future demand, government will find it harder to fully make use of its consolidated buying power because it will not know how much it can commit to spending in the future in order to secure the best deals. It explained that part of the work going forward would be to add forecast data and build a reliable forecast for digital spending but recognised that this would be difficult.⁵⁴

Making best use of government’s buying power

32. GCF explained that government has historically sought to exercise buying power through competition between technology suppliers. Increasingly, the technology market is being dominated by a small number of very large suppliers. We observed that moving between digital suppliers, particularly cloud providers, is not something to be undertaken lightly because the change can be very expensive, complex and disruptive. Both DSIT and GCF recognised that this gives customers, including government, a more limited choice and so they need to become more sophisticated buyers.⁵⁵

33. Government has made attempts to co–ordinate in order to gain benefits from its scale. GCF has signed agreements with the major cloud providers which allow them to treat the public sector as a single customer for the purposes of determining volume discounts.⁵⁶ However, DSIT recognised that government’s current approach to buying cloud was fragmented and “is not right”. It told us that “there is real work to do on that specific point.” We therefore asked how government could become a modern and sophisticated buyer of cloud. DSIT told us that “the way cloud economics works is that being able to write a commitment to a cloud provider matters an awful lot to them, and it gives us maximum commercial leverage.” ⁵⁷
GCF said that “ultimately, to get the best leverage, you would do a single deal” but that “in practice, it is very difficult to line up multiple customers with differing requirements”. It explained that improving its approach will entail moving beyond memoranda and frameworks to a position where commercial arrangements support government being able to commit the money and contract singly with the same supplier.⁵⁸

34. The NAO found that government will need to adopt wide–ranging changes to how it approaches digital commercial activity, which reflect the changing reality of technology markets. For example, it will need to understand its negotiation levers more fully, understand more clearly how the centre of government and departments can work together, and focus more on developing requirements in advance of contract awards.⁵⁹ The Cabinet Office told us that government “underestimate[s] quite often” the pace at which technology moves on, and as a result comes up with quite static requirements. It accepted that it had not built agility into the way in which contracts move with the technology.⁶⁰

Formal minutes

Thursday 8 May 2025

Members present

Sir Geoffrey Clifton-Brown, in the Chair

Mr Clive Betts

Nesil Caliskan

Anna Dixon

Sarah Green

Lloyd Hatton

Chris Kane

Sarah Olney

Government’s relationship with digital technology suppliers

Draft Report (Government’s relationship with digital technology suppliers), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 34 read and agreed to.

Summary agreed to.

Introduction agreed to.

Conclusions and recommendations agreed to.

Resolved, That the Report be the Twenty-Seventh Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available (Standing Order No. 134).

Adjournment

Adjourned till Monday 12 May at 3 p.m.

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Thursday 27 February 2025

Sarah Munby, Permanent Secretary, Department for Science, Innovation and Technology; David Knott, Government Chief Technology Officer, Government Digital Service, Department for Science, Innovation and Technology; Clare Gibbs, Joint Interim Government Chief Commercial Officer, Cabinet Office; Andrew Forzani, UK Government Chief Commercial Officer, Cabinet Office; Cat Little, Permanent Secretary, Cabinet Office, Chief Operating Officer, Civil ServiceQ1-75

Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

DTS numbers are generated by the evidence processing system and so may not be complete.

1 Centre for Care - University of SheffieldDTS0002

2 Delta gDTS0001

3 Glazik, Miss Sophie (PhD student, Sheffield Hallam University)DTS0004

4 VerticeDTS0003

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.

Session 2024–25

Number	Title	Reference
26th	Decommissioning Sellafield	HC 363
25th	DHSC Annual Report and Accounts 2023-24	HC 639
24th	Government cyber resilience	HC 643
23rd	The cost of the tax system	HC 645
22nd	Government’s support for biomass	HC 715
21st	Fixing NHS Dentistry	HC 648
20th	DCMS management of COVID-19 loans	HC 364
19th	Energy Bills Support	HC 511
18th	Use of AI in Government	HC 356
17th	The Remediation of Dangerous Cladding	HC 362
16th	Whole of Government Accounts 2022-23	HC 367
15th	Prison estate capacity	HC 366
14th	Public charge points for electric vehicles	HC 512
13th	Improving educational outcomes for disadvantaged children	HC 365
12th	Crown Court backlogs	HC 348
11th	Excess votes 2023-24	HC 719
10th	HS2: Update following the Northern leg cancellation	HC 357
9th	Tax evasion in the retail sector	HC 355
8th	Carbon Capture, Usage and Storage	HC 351
7th	Asylum accommodation: Home Office acquisition of former HMP Northeye	HC 361
6th	DWP Customer Service and Accounts 2023-24	HC 354
5th	NHS financial sustainability	HC 350
4th	Tackling homelessness	HC 352
3rd	HMRC Customer Service and Accounts	HC 347
2nd	Condition and maintenance of Local Roads in England	HC 349
1st	Support for children and young people with special educational needs	HC 353

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Footnotes

1 C&AG’s Report, Government’s approach to technology suppliers: addressing the challenges, Session 2024–25, HC 543, 16 January 2025

2 C&AG’s Report, paras 1, 1.5

3 Q 1; Cabinet Office, New Government Chief Commercial Officer announced, 4 February 2025

4 Qq 3, 27; C&AG’s Report, para 2.13

5 C&AG’s Report, para 21

6 Q 18; Department for Science, Innovation and Technology, State of digital government review, January 2025, page 35

7 Q 20

8 State of digital government review, page 35

9 Qq 20, 75

10 C&AG’s Report, para 10

11 Qq 8, 10–12; C&AG’s Report, Key facts

12 Q 6; C&AG’s Report, para 17

13 Qq 6–8

14 Q 1, 2

15 Qq 1, 47

16 Department for Science, Innovation and Technology, A blueprint for modern digital government, January 2025

17 Qq 1, 5

18 Qq 15, 20, 41

19 Qq 23, 27–29

20 Qq 27–29

21 Qq 28, 38

22 Letter from the Cabinet Office, 13 March 2025

23 Qq 5, 7, 15, 20, 23, 27–29, 38, 41

24 Qq 51, 57

25 Q 57

26 Q 51

27 C&AG’s Report, paras 11, 2.21

28 Qq 69–71

29 Qq 7, 51

30 Q 48

31 Qq 49–50

32 Letter from the Cabinet Office, 13 March 2025

33 Cabinet Office, The Digital, Data and Technology Playbook, March 2022, updated June 2023

34 Qq 64–65

35 C&AG’s Report, para 2.4

36 Qq 16, 64

37 Q 65

38 Q 66

39 Qq 32, 38; C&AG’s Report para 1.12

40 Q 38

41 Qq 32, 39

42 Q 51

43 Qq 38, 41, 56

44 Qq 55–58

45 Q 33

46 Qq 33–34

47 C&AG’s Report, para 2.13

48 Q 52

49 Qq 51–52, 75

50 C&AG’s Report, para 12

51 Qq 19, 51, 69

52 Qq 13–14; C&AG’s Report, paras 1.3, 1.13

53 Qq 13–14, 23, 33

54 Qq 2, 23, 29; C&AG’s Report, para 12

55 Qq 27–29

56 C&AG’s Report, para 12

57 Qq 28–29

58 Qq 28–29

59 C&AG’s Report, paras 10, 12, 14, 17

60 Q 27