MPs slam £14bn tech procurement failures: Can the UK fix digital buying before AI expands?

Why the UK government’s £14 billion tech procurement model is under fire

The Public Accounts Committee of the United Kingdom Parliament has issued a scathing assessment of the government’s digital procurement ecosystem, citing systemic failures that continue to waste taxpayer money and undermine critical modernisation goals. According to the committee’s Twenty-Seventh Report (HC 640), published on 6 June 2025, an estimated £14 billion in annual government spending on technology suppliers is being managed through fragmented oversight, a chronic skills shortage, and outdated procurement practices.

The inquiry, based on hearings with the Cabinet Office and the Department for Science, Innovation and Technology, concluded that the government’s digital ambitions—including AI adoption and cloud transition—are being constrained by structural inefficiencies and a lack of cohesive leadership. Despite recent efforts to centralise capability through the Digital Commercial Centre of Excellence, MPs warned that the United Kingdom is still “not acting as an intelligent customer” in its dealings with large-scale digital vendors.

What is driving the UK’s public sector digital procurement challenge?

The core of the crisis lies in the mismatch between modern technology supply models and legacy procurement practices still embedded across Whitehall. While cloud computing, software-as-a-service (SaaS), and agile development frameworks now dominate the global tech sector, the United Kingdom continues to engage digital suppliers through outdated structures geared toward capital-intensive infrastructure contracts.

The Government Commercial Function, which operates under the Cabinet Office, remains the central authority for procurement policy. However, its digital supplier management resources are extremely limited, with only 15 professionals overseeing the UK’s 19 largest technology vendors. In contrast, there are approximately 6,000 generalist commercial personnel spread across departments, most of whom lack technical or digital training.

The Department for Science, Innovation and Technology, which holds strategic responsibility for the UK’s digital transformation, lacks formal authority over procurement. The Government Digital Service, accountable to DSIT and responsible for driving data and digital policy across departments, is similarly sidelined in commercial decision-making processes.

Why the Digital Commercial Centre of Excellence may not be enough

To address longstanding fragmentation, the Cabinet Office and DSIT jointly announced the formation of a Digital Commercial Centre of Excellence in January 2025, as part of the “Blueprint for Modern Digital Government.” The centre has been tasked with multiple responsibilities—ranging from supporting departments with cloud optimisation to improving supplier engagement for startups and SMEs.

However, MPs remain concerned that the centre, staffed by only 24 digital experts, may not have the bandwidth or authority to fulfil its expansive mandate. In particular, the report questions whether the centre will have the power to realign entrenched procurement cultures or coordinate supplier negotiations at a scale that could result in substantial taxpayer savings.

The Cabinet Office has stated that the centre will act as a “powerhouse” for procurement modernisation, working in parallel with the Government Digital Service to refresh sourcing strategies, standardise digital training, and consolidate demand forecasts. Yet the committee noted that it remains unclear who ultimately holds decision-making authority across these interdepartmental efforts—especially in high-stakes negotiations with global technology providers.

How lack of digital commercial skills is slowing public sector reform

One of the most urgent gaps identified by the committee is the scarcity of digital commercial expertise within the civil service. Most departmental procurement staff are trained in traditional commercial frameworks, with few having the capabilities to negotiate modern technology contracts involving AI systems, hyperscale cloud platforms, or cybersecurity services.

Despite efforts to roll out training programmes, the Public Accounts Committee found that these were too generalist in nature and often lacked collaboration with digital professionals. The committee urged the Cabinet Office and DSIT to develop a full-scale plan to upskill all 6,000 members of the Government Commercial Function, ensuring a consistent baseline of technical awareness across government.

The committee further recommended that each major department be staffed with at least one senior digital-commercial expert and include a Chief Digital Information Officer on its executive board. Without these institutional guardrails, large departments may continue to operate in silos, while smaller departments risk falling behind in digital capacity.

Why better data is needed for smarter technology sourcing

Although the UK government spends over £14 billion annually on digital procurement, it lacks a central database to track spending or forecast future demand. This absence of baseline data makes it difficult to negotiate volume-based discounts or harmonise vendor contracts across departments.

The Government Commercial Function has rolled out a digital data platform in early 2025 under the Procurement Act, allowing departments to upload expenditure records and upcoming sourcing needs. However, both DSIT and GCF acknowledged during testimony that this system only provides the infrastructure—not the compliance or standardisation needed to support strategic procurement.

MPs stressed that without a robust data layer, central procurement teams cannot make informed decisions about supplier leverage, cloud commitments, or cross-government cost-sharing. A recommendation was made that the Cabinet Office and DSIT present, by Autumn 2025, a comprehensive plan for closing the data gap—covering not just systems, but also personnel and departmental cooperation.

What role do large suppliers play in shaping UK government tech spending?

The committee’s investigation also raised questions about the UK government’s over-reliance on a small number of global technology suppliers. Cloud computing, in particular, has become a focal point of concern, with DSIT acknowledging that fragmented departmental deals and unclear commitments have weakened the state’s negotiating position.

Both GCF and DSIT admitted that “single deals” with cloud providers would be ideal for achieving economies of scale, but that such coordination is nearly impossible when departments have differing requirements and timelines. The report also cited the rising cost and complexity of switching between cloud providers as a deterrent to supplier diversification.

As a corrective step, MPs urged the creation of a commercial construct that goes beyond frameworks and memoranda, enabling the UK government to make binding volume commitments and leverage its full £14 billion spend more strategically. The proposed approach would require pre-aligned procurement goals across departments and a new generation of digitally fluent contract managers.

What does the future hold for digital procurement in the UK?

Looking ahead, the report paints a challenging picture. Institutional culture, legacy IT dependencies, and siloed responsibilities continue to slow down digital reform across the civil service. DSIT acknowledged that even where digital strategies exist, execution is inconsistent and often disconnected from financial planning cycles.

The committee noted that transformational success depends on “cultural change at the top”—and not just toolkits or training plans. For this reason, the Cabinet Office and DSIT were encouraged to embed digital-first thinking into the very fabric of civil service leadership, with greater emphasis on board-level accountability and independent oversight.

Analysts in the procurement and digital governance space have indirectly signaled that unless the government makes rapid progress in integrating commercial strategy with technical execution, future tech programmes—particularly in AI, cybersecurity, and healthcare digitisation—may fail to deliver value for money.

How the UK can fix its broken digital procurement model before it’s too late

The 6 June 2025 report from the Public Accounts Committee serves as a comprehensive roadmap for reforming how the UK government engages with digital technology suppliers. From fragmented procurement policies to under-resourced supplier management, the system as it stands today risks losing billions to inefficiencies just as the need for digitally enabled public services intensifies.

By expanding the mandate and staffing of the Digital Commercial Centre of Excellence, embedding digital expertise across procurement hierarchies, and consolidating supplier engagement strategies, the United Kingdom has a narrow but viable window to reset its approach. The coming months will test whether government departments can move from aspiration to execution—or whether systemic inertia will once again prevail.