Daniel - stock.adobe.com

News

NAO report calls for government IT procurement rethink

Criticism abounds of reliance on big tech to deliver digital transformation across government departments

Simon Quicke
By
Published: 16 Jan 2025 14:45

The government has been advised that better use of technology suppliers would support improved digital outcomes, and potentially avoid delays and wasting taxpayers money.

A report, Government’s approach to technology suppliers: Addressing the challenges, from the National Audit Office (NAO), has recommended increasing the level of digital skills in government departments and a recognition that “big tech” players are not always the answer.

The channel has long asserted that given the chance, it could make a positive difference, but it’s often overlooked, with large SIs and incumbents managing to pick up the contracts.

The NAO report stressed that around £14bn was being spent by the government on digital procurement annually, and there was mixed success with the results of much of those investments.

The government was warned the shift to the managed services model had caught it largely unawares, and it continued to take comfort in working with just a handful of suppliers.

“Some technology markets have experienced fundamental shifts and are now dominated by very large suppliers, such as the increasing reliance on ‘big tech’ for providing cloud services and artificial intelligence capabilities,” the report said.

“Digital services are rapidly changing in nature, and are increasingly underpinned by technology and services which are subscription-based, and which government does not ultimately control. This calls for an approach which responds to this changing environment.”

Lack of digital skills

The NAO bemoaned the lack of digital skills, which undermined procurement, and the reliance on a select few suppliers.

“Government has a long-standing need to improve its use of technology suppliers, and its slow progress in doing this has contributed to poor outcomes in its attempts to modernise government,” the report stated.

"The external market environment is also changing,” it added. “Traditional models of outsourcing or creating government-owned assets are giving way to subscription-based models such as the use of cloud services, and government has been slow to adapt how it engages with and manages suppliers. It needs to define a comprehensive sourcing strategy for the digital age which takes into account how to deal with ‘big tech’ and global cloud providers that are bigger than governments themselves, while aligning with policies on research and innovation.”

Gareth Davies, head of the NAO, said it was a moment when there needed to be a change in approach if digital transformation objectives were going to be achieved.

“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 said.

Improvement needed

Geoffrey Clifton-Brown, chair of the Committee of Public Accounts, said the management of suppliers could be improved.

“Government spends at least £14bn a year procuring digital services, but its woeful handling of major digital programmes has led to delays and costs to the taxpayer,” he said.

“Digital commercial skills are in short supply and government is not making the most of the limited expertise it has. Government has managed digital suppliers poorly, and the centre of government has not provided direction to help departments become intelligent clients.”

Clifton-Brown said there needed to be government support for a more diverse technology sourcing strategy.

“The Public Accounts Committee has long maintained that technology can transform the way government delivers public services,” he said. “Without a more strategic approach from the centre, and a sourcing strategy that is fit for purpose for the digital age, the government risks wasting more money and squandering the opportunity to modernise the public sector.”

Read more on Finance and Credit