In its 55-page report, the public sector spending watchdog said the government stands to save significant amounts of time and money by improving how it engages with big technology suppliers, which are – in some cases – “bigger than governments themselves”.
Doing so will require the centre of government to learn from past mistakes made with large-scale digital transformation projects, which have “experienced decades of poor progress and billions of pounds in cost increases”.
In broad terms, the NAO is calling for the creation of a “cross-government sourcing strategy” where the commercial functions tasked with overseeing procurement work with organisations that have a role to play in setting the course of the government’s digital strategy.
“The Government Commercial Function [GCF] is a cross-government network of around 6,000 civil servants who support the procurement of goods and services for government … [and is] responsible for government’s overall commercial performance and providers strategic direction, guidance and develops capability,” the report stated.
“The Central Digital and Data Office (CDDO) is government’s centre of expertise in digital and data but has no formal responsibility for digital procurement.”
Out of the 6,000 people working within GCF, 15 are responsible for managing the relationships between the government and its largest tech suppliers, the report added.
More direction from the centre
The Labour government has undertaken something of a digital reshuffle, having decreed that the Department for Science, Innovation and Technology should assume responsibility for running the Government Digital Service (GDS) and the CDDO since coming to power in July 2024.
As detailed in the NAO’s report, the CDDO has previously flagged digital procurement as an area of improvement for the wider government, but the organisation has lacked the in-house expertise needed to “make headway with the substantive challenges” in this area.
To accelerate progress in this area, the NAO said the centre of government needs to be subject to a “system reform” to pave the way for a more “strategic approach to digital procurement” to be adopted across government.
Government needs to rethink how it procures digitally, including how to deal with ‘big tech’ and global cloud providers that are bigger than governments themselves Gareth Davies, National Audit Office
The report does acknowledge that the CDDO and GCF have previously collaborated on the creation of a “digital playbook”, in March 2022, to provide buying advice and support to departments on how to approach technology procurements, but its contents remain a work in progress. “The digital playbook would benefit from greater departmental and external input on the more complex issues,” it said.
The report also said departments are struggling to deliver on their digital transformation goals because issues at the centre of government are having a trickle-down effect on them.
“The centre of government sets the overall direction, culture and conditions, but individual departments award contracts to suppliers and subsequently manage them,” the report stated. “[But] it is at this departmental level where problems, arising from the overall commercial and contracting environment and processes, are most likely to manifest themselves.”
It continued: “There is no single area focused on highlighting and addressing how departments can improve the use of suppliers in digital transformation projects.”
To remedy this, the NAO said departments need to work more closely with procurement specialists so they can refine their digital procurement requirements before cracking on with tender processes. “This would [also] help the centre of government build a more strategic approach to suppliers,” it added.
Gareth Davies, head of the NAO, said the government’s decision to revamp how its central digital functions are organised presents an opportunity for the issues flagged in the NAO report to be rectified.
“A lack of digital and procurement capability within government has led to wasted expenditure and lack of progress on major digital transformation programmes,” said Davies.
“Government needs to rethink how it procures digitally, including how to deal with ‘big tech’ and global cloud providers that are bigger than governments themselves.”
He added: “The creation of the new digital centre of government provides an opportunity to make the systemic changes that are needed.”
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