Whitehall fails to recognise digital procurement challenge, says PAC
Committee concerned that Government Commercial Function doesn’t understand the scale of reform needed to address long-standing digital procurement issues, including lack of skills and leadership
A report by the committee said the government has yet to fully grasp the scale of reform needed to transform digital procurement and better leverage its buying power when dealing with technology suppliers.
It added that the Government Commercial Function (GCF), which supports the procurement of goods and services for government, needs to do more to build digital commercial skills.
The GCF spends around £14bn a year with digital suppliers, but only 15 of the 6,000 people working within the function are dedicated to the management of technology suppliers.
“Given the pace of digital technological change needed to adopt artificial intelligence (AI) and the significant shift from legacy systems to modern replacements, this number is simply not tenable,” the report said, calling for all 6,000 staff to be trained to work closely with digital specialists to understand how to incorporate digital into procurements.
It added that the amount of money spent on digital suppliers gives the government “significant buying power” and the potential to strike deals that are beneficial to the taxpayer, but the government is yet to fully leverage that power.
The PAC is also concerned that the GCF’s current plans to build the expertise needed across the civil service to improve its digital commercial activity are insufficient.
The PAC wants the departments to “explicitly state how they will overhaul the ratio of digital commercial experts relative to the wider commercial function and ensure that the views of digital experts are given due prominence and properly considered throughout the lifecycle of contracting for digital technology”.
Digital Commercial Centre of Excellence
In January 2025, the government announced plans to set up a Digital Commercial Centre of Excellence to overhaul the management of government spending on technology.
The centre’s remit will extend into local authorities by enabling councils to negotiate contracts jointly to save money, for example, as well as opening up more opportunities for tech startups and scaleups to win government contracts.
However, the PAC report pointed out that the Centre of Excellence would only have 24 experts, jointly working across DSIT and the Cabinet Office.
“We are concerned that DSIT will not have sufficient authority over other departments to produce the scale of change needed,” the report said, adding that it may end up in an advisory role while digital procurement may continue to be led by “non-digital specialists”.
The government is talking a big game in digitally evolving Whitehall, but we are concerned that it is not yet fully cognisant of the pace at which it will need to adapt to keep up with the wider digital and AI revolution
Geoffrey Clifton-Brown, Public Accounts Committee
The GFC acknowledged during a PAC hearing that there can be tension between commercial and digital functions about how to do things. The committee said there needs to be more clarity on who leads relationship management with digital suppliers and called for the government to “address the problems with digital commercial activity”.
The government has had long-standing issues with large digital transformation projects, often stemming from the same problems, including supplier relationships, lack of clarity, skills and leadership.
PAC chair Geoffrey Clifton-Brown said that while the government has big ambitions for digital transformation, they exist in a context “in which the field is littered with failed digital transformation projects which suffered from the same systemic issues – a lack of in-house skills, a lack of effective cross-governmental collaboration and a lack of future-proofed infrastructure”.
“The government is talking a big game in digitally evolving Whitehall, but we are concerned that it is not yet fully cognisant of the pace at which it will need to adapt to keep up with the wider digital and AI revolution,” he said.
“Technological change was encompassed in the 19th century by electricity, the 20th century by the internet, and in the 21st century, it will be by AI.”
Clifton-Brown added: “It is vital that those at senior levels who understand the scale of what government faces communicate this with urgency to the wider mechanisms across departments. Without reckoning with the reality on the ground, which our report lays out, aspirations will not get government very far.”
Lack of data
The PAC report follows on from a hearing on the subject, which took place in March 2025.
During the hearing, which in turn followed a National Audit Office (NAO) report calling for the government to have a more strategic approach to procurement, government chief technology officer David Knott revealed that the government would develop a “clear digital sourcing strategy” over the summer, giving departments clear guidance on when to go to market and when to focus on in-house builds.
The hearing also addressed the lack of data on digital procurement. While the government quotes a £14bn digital procurement spend figure, this comes from estimates from third parties, as the government is missing basic data on how much is being spent on technology contracts.
The PAC report pointed out that the government cannot say for certain how much it spends, as it has “no central record of this spending”.
“The 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,” the report said.
“Without reliable data, the government cannot make informed buying decisions or fully make use of its consolidated buying power.”
The PAC has called on the government to ensure it has the data and capability to make informed decisions about how it spends money with technology suppliers by autumn 2025.
“The Cabinet Office accepted that the government could do much more to bring together a plan for formally assessing the government’s digital procurement needs,” the report said.
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