Government needs to learn from its past mistakes in dealing with technology suppliers, according to a new report from the National Audit Office (NAO).
It has called for measures including the development a cross-government sourcing strategy that takes account of how to deal with ‘big tech’ suppliers that are bigger than government, and more support for departments in their processes and engagement with suppliers.
The report, Government’s approach to technology suppliers: addressing the challenges, examines government’s overall approach to digital tech suppliers in spending at least £14 billion per year with the industry.
It conveys the view that commercial teams have previously not made full use of digital expertise, but have typically adopted a generalist model more suited to traditional outsourcing, with limited use of a more strategic approach and specialist capabilities.
They could save significant sums of time and money by improving how they engage with technology suppliers; but only if they learn from past procurement approaches to large scale digital transformation projects in which there has been poor progress and billions of pounds in cost increases.
This leads to the need for a cross-government sourcing strategy, and for government to keep pace with changes in the technology market – something in which it has failed in recent years, the NAO says.
Lessons for the centre
As a response, it cites the Government’s intention to create a ‘digital centre of government’ and sets out three lessons to be taken into account.
One is that there are not enough people with digital commercial skills in government. The Government Commercial Function (GCF) – civil servants who support a range of commercial activity, including digital – does not have all the skills needed to address the distinct procurement challenges of major digital change programmes.
Conversely, government’s central digital function, which leads on digital and data policy, is not formally responsible for and is not resourced for more extensive engagement in digital procurement.
Second is that procurement guidance does not address all the complexities of digital commercial issues, and government would benefit from greater departmental and external input on the more complex issues in technologically enabled business change.
Thirdly, government struggles with the breadth of issues that affects its ability to engage effectively with suppliers. It needs to invest in capability to improve its understanding of digital markets, its technical expertise and how to partner more effectively with suppliers.
Lessons for departments
Another three lessons are addressed relevant to departments, one being that their commercial teams do not always engage with their internal digital experts at the right time.
This is compounded by digital contracts being often being awarded with insufficient preparation and without a full understanding of what is needed, as programme teams are under pressure to deliver.
Thirdly, approaches to contract design can have a negative impact on digital delivery. Government can opt for mechanisms which limit the flexibility for suppliers to use their expertise to help deliver the desired outcomes.
This prompts a series of recommendations from the NAO, including that GCF and the Crown Commercial Service should take responsibility for addressing a number of issues. These include:
- deciding who should take ownership of the strategic relationship with suppliers and responsibility for collecting and analysing data on government’s digital commercial activities;
- producing a sourcing strategy on how government should negotiate with big tech and strategic suppliers;
- identifying actions to improve governance, processes, guidelines and supplier engagement;
- working with departments to identify what further negotiation levers they would find useful;
- and addressing recruitment shortfalls and better equipping officials with responsibility for procurement of digital systems.
“The creation of the new digital centre of government provides an opportunity to make the systemic changes that are needed,” the report says.
Individual bodies' priorities
It also makes recommendations that departments and public bodies should:
- ensure the chief digital and information officers are responsible for overseeing contracting with technology suppliers, supported by their digital commercial teams;
- strengthen their intelligent client function, developing key requirements before tenders and bid processes begin;
- and set up the capability to improve data and processes to inform decision making.
Gareth Davies, head of the NAO, commented: "A lack of digital and procurement capability within government has led to wasted expenditure and lack of progress on major digital transformation programmes.
“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.
“The creation of the new digital centre of government provides an opportunity to make the systemic changes that are needed."
