Welcome to the Public Accounts Committee on Thursday 27 February 2025. Critical to the success of the Government’s ambition to improve and digitally transform their services and operations is their effective use of technology suppliers, with the Government spending over £14 billion a year on procuring digital services in this area. The previous Committee’s 2021 report on challenges in implementing digital change raised concerns regarding the number of failures of complex large-scale digital programmes. The impact of these failures had serious implications for major Government services and taxpayers’ money. Today, we will be examining Departments on what progress has been made in addressing these long-standing issues in Government’s digital procurement and the Government’s strategic approach to dealing with suppliers, as well as Departments’ digital expertise in this area. We welcome our witnesses this morning, particularly our two permanent secretaries, who are very busy people. Cat Little was appointed permanent secretary to the Cabinet Office in 2024, prior to which she was second permanent secretary to HM Treasury. Were you in charge of Government procurement at Treasury?

No. The Cabinet Office has always been in charge of procurement, but at the Treasury I was responsible for spending, and there was a very close relationship with our commercial colleagues to make sure that we did everything together.

That is really helpful. Thank you. A warm welcome also to Sarah Munby, who has been the permanent secretary to DSIT since its inception in February 2023 and was previously the permanent secretary to its predecessor Department, BEIS. To help us, they have brought along their teams. In Cat Little’s Department, the Cabinet Office, we have the acting head of the Government Commercial Function, Clare Gibbs. Clare has been part of the Government Commercial Function since 2017 and had previous commercial roles in the MoD and the National Crime Agency. A special warm welcome to you, Clare: I think this is your first appearance before the Committee.

It is.

Alongside her is Andrew Forzani, the Government chief commercial officer. You have recently been appointed to your role, having had over 30 years’ experience in commercial and procurement supply chain management. Congratulations—well, I hope it is congratulations. To help us with some of the more technical aspects, a warm welcome to David Knott, the chief technology officer at the Government Digital Service. You joined as the chief technology officer of the UK Government in 2023 and also have 35 years’ experience as a technology leader, strategist and architect. When it comes to all the technical questions, we will turn to you. Thank you very much for being here today. Without any further ado, let us move on with the session.

I can entirely understand why you would draw that from the Report. I should take the opportunity to thank the NAO for the excellent work with us. We very much welcome all the recommendations and the insight in the Report. On the point about accountability and who does what, it might be worth setting out the landscape and what we are doing to make that clearer. The Cabinet Office is responsible for all procurement policy, commercial training capability and the Government Commercial Organisation. That is a very clear accountability. We have commercial senior members of staff who report into the Government chief commercial officer in every single Department. They must ensure that they are complying with the procurement standards that we set for Government overall. We then have our colleagues who work in digital, who sit in DSIT and, as we discussed at our Committee a few weeks ago, are responsible for the overall strategy and for working with Departments to deliver. The thing that has been complex in the past is how you bring the two together as a digital procurement function and set a sourcing strategy and a process that is designed to deliver the strategy that the Government want to deliver. I do not think that that has been as clear as it could be. That is exactly why we have created the digital commercial centre of excellence, which is going to be a joint unit within DSIT, but with reporting lines to the Cabinet Office and me, and, ultimately, to my colleague Sarah. That will be jointly staffed with experts in digital procurement. That is a gap that we have had before that we need to fill. The other thing I would say is that we represent the centre of Government, but we all have experience of doing procurement in Departments. Working very closely with Departments to make sure that they understand the interfaces between digital and commercial skills is critical. I am particularly passionate about multidisciplinary thinking. I am sure we will come on to transformation programmes and technology-led transformation programmes, but it is not just about these two functions. It is about all our teams coming together to solve problems and bringing their expertise to bear. The accountabilities for commercial, procurement and digital are much clearer and I hope that the digital commercial centre of excellence will harness those two functions’ capability effectively.

Ultimately, the buck stops with the Cabinet Office, because we are responsible for all procurement, maximising the buying power of the state and doing that in a professional, compliant way. It is a major week for us in the commercial function, with the Procurement Act coming into force on Monday. We are absolutely determined to ensure that every single part of the state is using the benefits of the Procurement Act to drive delivery, especially when it comes to digital procurement. There are lots of benefits in the Procurement Act that my colleagues are particularly passionate about and, I am sure, would be happy to share with the Committee.

Andrew and Clare might want to add to this, because this is a very live piece of work. I should absolutely accept that what the Report highlights is a constant challenge for us. You can have the frameworks and the accountability, but compliance, enforcement and making sure that we do that effectively are what we need to do every single day. There are definitely gaps. There are also definitely parts of what we do in Government procurement where you have to take a bespoke, tailored and proportionate approach to what we are trying to do. At the time of the Report, that was absolutely right. As I say, we have made some changes with the centre for commercial excellence. We have the big tech unit within DSIT, which is very clearly the lead for some of our big suppliers. We have the state of digital government review, which sets out what we actually want to deliver in our digital strategy. That means that we can now develop our sourcing strategy with our supply chain and really leverage the strategic supplier relationships that we hold for Government in the Cabinet Office.

Ultimately, the Departments are responsible for their individual procurements, those programmes and how that money is spent. In the centre, we are providing a policy and best practice framework for how the procurements are done and, increasingly over the last few years, how the supply should be managed. We have had a reasonably good track record on how we have tried to manage the major suppliers across Government. There are 39 strategic suppliers. As you are probably aware, 19 fall into the digital space. There is quite a big wraparound from Cabinet Office to try to get consistency to manage that as a single strategic relationship in terms of the programmes they deliver and making sure they are good corporate citizens. There have been some real successes there. We would probably accept that we absolutely have to improve in how the commercial and digital functions work much more closely together, so that there is more of a north star digital strategy to which we can point all the Departments and which our guidance can really help deliver.

I will clarify, and Andrew should add to this. We have a formal role. Any programme that is over £1 billion has to come through a very robust central major projects investment process. That is where we bring together the Treasury and Cabinet Office functions to stress-test major procurements. We also have a very rigorous and disciplined professional controls regime for procurement. It is not just guidance; there are compliance and what we would call a second layer of assurance mechanisms that test compliance and provide an extra layer of professional challenge in the way in which Departments go about undertaking their procurement. As Andrew said, the strategic supplier regime and our Crown representative process has been very successful. It means that there is one single place in the Cabinet Office where we are bringing together our views, relationships and ways of working with our major tech suppliers, so that we are maximising the breadth of the relationship with these 19 companies for the whole of Government. I would not want you to think that there are not much more rigorous mechanisms for control at the centre.

I agree that it is quite complicated. If you are a small business, you want to engage with Government and you have to talk to lots of different Government Departments, there is less formal structure in place, but we also have lots of teams in Departments working with our SMEs, because our hope is that those SMEs are going to become the big strategic suppliers of the future. We recognise that, particularly if you are not in that top 19, it can be a bit more of a varied landscape. That is why the Procurement Act brings us greater flexibilities for working with SMEs and why we want the digital centre of excellence to have more relationships with a broader breadth of the supply base.

We also have the Crown Commercial Service. That is setting a lot of the contractual frameworks that are available across the whole of the public sector. There is a significant amount of spend going through contractual arrangements that have been set by the centre, and much of those with those more mid-tier SME-type suppliers. I do not think that we disagree with your main thrust. The centre of excellence will be looking to pull much more of that together and have that stronger voice. We have some strong ambitions to look at the whole digital landscape and starting to see where we can buy better and more effectively. There is a choice there: do we need to take more control? We need better data at the moment, and we are very much hoping that the centre of excellence will give us that.

These programmes and projects are multidisciplinary teams. I have just spent the last seven years in defence. My personal experience has not been that commercial and digital teams are working against each other. There are multidisciplinary teams of project delivery people, digital, commercial, finance and legal. They come together as a project team to deliver a large, complex IT programme. Together, they have to agree what the right strategy is and the best way to approach the market. The different professions will give their professional advice, and sometimes there is a bit of tension there about the right way to do things and about different approaches. There is obviously a regulatory framework that we have to follow as well. I know that the Report talked a bit about not necessarily working together. There was almost an inference that maybe it was too commercially led and that that was not always appropriate. I have not really seen that.

The issue is consistency. The Report also draws out an important point about the point in the cycle between policy inception and delivery where these multidisciplinary teams come together. That is a constant challenge in Government: making sure that you have the professionals at the table when you are solving problems and developing policy ideas. In my experience, that is quite mixed. Some Departments are better than others at getting their commercial, digital, finance, HR and legal teams together at inception. That is something that we have to fix. We need to have commercial, digital and other experts helping to solve things from the start, including our supply chain. We have really learned that in recent examples. If you spend all your time in Government thinking you know what the answer is and only start talking to your supply chain when you have come up with a polished answer, you are likely to fail. We have to bring everything further up the problem‑solving chain.

This sort of programme does not happen overnight. The next immediate step is to fully staff up resource and ensure that our digital centre of excellence has the capacity across our digital and commercial teams to operate. That is happening over the course of March. We will have 24 experts set up, jointly working to both Departments. The immediate next step is to develop our sourcing strategy, work with the big technology suppliers through the BTU, our big tech unit, and work out how we go about procuring in different ways to deliver the tangible things that the Government have asked us to deliver. I make that sound very simple, but it is actually incredibly complicated. Then there is a much broader package about how we continue the brilliant progress we have made on upskilling the functions but also the wider civil service, so that we are a really intelligent customer. That is an ongoing challenge, alongside how we police and ensure compliance across everything that we do. That is not a simple set of actions that change overnight, I am afraid; that is a comprehensive package of upskilling, capability and assurance.

Sarah Munby, I worry a lot about all of this. We are on the cusp, I think, of a once-in-a-generation change in how Government do things. There is relatively little resource in your Department, but you do not have the levers to make it work. The commercial lot in Cat Little’s Department do. An example is that in the Government Commercial Function, out of 6,000 people, there are only 15 to deal with Government’s 19 largest digital suppliers. They have all the levers; you do not. I worry that we are going to continue to manage these big Government contracts that Cat Little was talking about in the same way that we always have, because that is how we have always done it. That is how the commercial people and Crown agencies have always done it. We are not bringing in the change that we need to bring in to implement digital parts of these big contracts. All contracts are going to have bigger and bigger digital content in future; maybe digital will eventually become bigger than the rest of the contract. I am not sure that we are bringing about change quickly enough, and I am not sure that your Department has been given the levers that you need to bring about that change.

I agree with your characterisation of the change and with what you have just said about digital becoming an ever more important part of contracts. That has already happened. This is really a point for my colleagues, but, looking at Government procurement as a whole, digital is already an enormous component of that work. To go back to the question of whose No. 1 priority this is, for my colleagues sitting here of course this is a No. 1 priority because doing Government procurement brilliantly is doing Government digital procurement brilliantly. Government procurement, in very large part, is digital procurement. This is not a small component of the procurement job; it is one of the largest components, if not the largest, depending on how you categorise things. It is worth bearing that in mind. That is why you would not want to go down a path of saying, “There is this special thing.” All of Government procurement is digital procurement in one way or another. That is why what we are trying to do is partner much more deeply. Part of our job—I say this with complete respect and collaboration—is to get the elbows out and keep encouraging the whole of the commercial function to take this agenda really seriously, the same as we do on all sorts of aspects of this work across Government. That does not mean that we should try to take on the functions of other bits of Government.

Sarah, with great respect, the number of people the Government Commercial Function employs and the resources it has versus the number of people you employ and the resources you have is a totally unequal balance, is it not?

It would be a question for Andrew, but I think Andrew would say that this is a priority for him. This is what those people should be doing. Personally, I do think that there is more to do to upskill. This is what Cat has just been talking about: upskilling commercial teams across Government and driving capability in this space to match that change that has happened and is happening in the outside world. That is what the commercial function is for. It is not an extra to be put on the side. On the bit about working together more, from my perspective and the Department’s, we need to be a really strong customer voice for what is needed in terms of results and approach. That drives and influences your commercial strategy. That is not just about the co-ordination and capability work that we were just talking about; it is also about saying where something should be bought collectively, not just because we might get a better price by buying collectively, but because strategically we think there should be one solution for Government. I will give you an example, which is simple but which brings it to life. There is the question of desktop platforms. Should you use a Microsoft or Google platform for your desktop, or something else? One reason to buy collectively across Government is that you think you can get a better price by doing that because you are a bigger buyer at scale. There is another really important reason, which is interoperability, so that people across different Departments are using platforms that are straightforwardly compatible. Of course, you can always fudge anything, but straightforwardly compatible platforms make it easier for different Departments to work together. That makes the kind of mission-driven Government that we are trying to achieve easier. It is our job to make those points about how we should change our approach and strategy, which are not purely commercial points. They come from a place of, “What is the digital change that we are trying to deliver?” It is pushing that signal right through the commercial and digital teams across Government. That is how we would see the model working, trying to say, “We need to make the levers that exist, the capability and the people deliver against that ambition,” rather than moving around the levers and the approach.

Let us bring David in here. Is your voice being heard clearly enough by the commercial team over there?

Yes, it is now. To be completely transparent, that close relationship has not always been in place. When I joined a couple of years ago, CDDO—the team I joined that has now become part of the Government Digital Service—probably did not have the strength and depth of digital commercial experts.

There is a lot to cover. Very quickly, please, Andrew, is my point not made by the fact that you have 6,000 people in the Government Commercial Function, yet only 15 of them are dealing with 19 of the largest Government suppliers? Does that not tell us everything we need to know about the commercial function and how seriously digital is treated within it?

Those figures are for the staff who are just managing those relationships as their full-time job.

These 19 major suppliers are a crucial part of the digital procurement programme, are they not?

Absolutely, yes. I do not want people to think that those 6,000 are sitting in the centre. Those 6,000 commercial people are spread across all the Departments. I do not believe that there is the mismatch that we have been talking about. In reality, where these programmes get delivered and these contracts get let in the Departments, as I said, it will be a multidisciplinary team. There will be a commercial team, a digital team and a project. I do not think that that actually happens on the ground and when these debates happen. Of those 6,000, a significant number are in digital teams. I have just come from Defence, and there is a digital commercial team of about 250 people in categories. There are teams that do software, desktops and networks and hosting. They are dealing with those suppliers every day. To some of the earlier points, a single relationship with the suppliers is incredibly difficult, because we have multiple customers in Government with orders and working with the suppliers each day, but those 15 are providing that overall relationship view. There are many hundreds and thousands in the function dealing with those suppliers every day as well.

Following on from that, paragraph 1.3 of the NAO Report says: “Government lacks basic data on how much is being spent.” How much is that data deficiency down to a lack of resources? I am going to address these questions to Andrew and Clare. How much is that data deficiency caused by the imbalance in resources to which the Chair has referred?

I do not think that we have a lack of data. Our challenge across Government is always pulling that data together and then being able to analyse it as effectively and quickly as we would like. Under the Procurement Act, we now have the central digital platform, where procurements will need to be uploaded. That will give us access more quickly to the data we need in setting those procurements going forward.

The Report says: “Government does not know the overall picture for how much is spent on digital change programmes”. The data might exist, but you do not have it in a form or place where you can use it appropriately. What is happening there? If the data exists, you do not have access to it.

We recognise that, historically, we have not been able to pull that data together. Going forward, under the Act, we have this platform that will allow us to do that.

It is quite good for the top suppliers, so those top 39, because of the way we manage them centrally. They have to do regular returns to us, and we are marking them quite closely. The spend with the big suppliers is very clear. We struggle once we move down to those mid‑tier and SMEs. As Clare says, the new platform that went live on Monday will require contracting authorities and Government Departments to put a lot more information up there. That increases the transparency and allows us to harvest a lot more data lower down.

It does, but any of us who have been involved in big change with technology know that it is once you have the thing up and running, and your people have to start interacting with it, that the deficiencies start to become apparent. You may have a reporting mechanism, but how are you going to ensure that everything is being done that the Act allows you to do? As Cat pointed out, it is the journey that the staff go on once the solution is in place that can really cause the problems. If I take you at the point that you are now ready to go, how are you going to ensure that the data is being inputted, and inputted in a way that you can then use?

I will take us back a little bit, if that is okay. We have a suite of playbooks. The Chair may recall that the sourcing playbook came out following the collapse of Carillion. In 2021, we recognised that there was a gap around digital and created the digital, data and technology playbook, which was developed in conjunction with David’s predecessors. We know that we need to do a lot more on that and refresh it, which we will do through the digital commercial centre of excellence. Within that suite, we have in draft a contract management one. We recognise that contract management has not been as robust as it should be. We have not published that yet. I am keen to get David’s view on making sure that we are robust around the digital aspects of contract management as well. We also do some training with regard to the playbooks.

My colleagues might want to add to this, but I think your point is also about how, once the guidance and the platform are there, we go about using that data.

How do you help Departments to provide the information? Giving them the playbook is one thing, but I think you pointed out that all of us are on a different journey when it comes to interacting with digital. Sometimes, if you are at a particular point in your career, interacting with digital can be a slower process than if you are at an earlier point. There is a human aspect to this that the playbook will not address. Once the playbook is in place, you have people to deal with. How are you going to help Departments to provide this information and then do it?

For those largest, most challenging digital change programmes, we have a centralised commercial team, the complex transactions team, which gets deployed into Departments to do that on‑the‑shoulder support. It is a relatively small team, but within that there are 20 to 25 real digital commercial experts who have a real significant history of delivering large outsourcing digital programmes. Just this year so far, they are working across 33 digital programmes across the Departments. That is direct on-the-shoulder support, really helping them to understand the playbook and those requirements. There is that. We could probably do more.

It is not that you probably could do more; you definitely could do more. The reason I know you could do more is that the data you have is not enough at the moment, and you are procuring. If you are procuring with insufficient data, you are procuring insufficiently. I recognise, and we all recognise, that you could do more. Today we are trying to look at what you are going to do. What is the “more” part of that statement?

We would entirely accept your point. We should go away and work out what more we should do in this space. There is another thing I would add. You will have to forgive me; it is probably my previous Treasury experience. As Clare said, it is actually quite difficult to collate all this information purely through a spending perspective. Andrew and Clare have been talking about procurement data. One thing that we are doing through the spending review this time round is a bottom-up zero-based review of Government expenditure. Our colleagues in DSIT are working with the Treasury to look at all technology and digital expenditure in order to understand what it is being spent on. It is a shame that we have to do this as quite a manually driven exercise as part of an SR. One thing that we are working with the Treasury on is what more we can do to automate and gather that information on a more frequent basis after the spending review, so that we can monitor it and then align it to the procurement data that we are now capturing. There is something there that we should take away and build out a more detailed data plan on.

I would agree with that. We have made the point that we are in a step change in technology at the moment. An observation I may have is that the technology is changing in a step change approach, but the Government approach is changing in an incremental approach. I wonder whether you think that that is possibly where you are getting out of kilter, which is causing some of these inefficiencies.

It does not feel very incremental within Government. Quite a lot of the change that we have seen has been happening for certainly the entire time I have been in Government, and I am sure for much longer beforehand. As Sarah said, there is not a single thing that we do that does not have a major technological, data or AI component. It has been quite revolutionary, and we have to match that pace, scale and prioritisation in the way we rise to the challenge. We are very seized of that.

You would accept that until we get better at collecting the data in order to analyse it, we are going to have inefficiencies within procurement, which will cost money.

I accept that. As I said, I very much accept your point. We are doing some good, proactive things, but we should do more.

We are seeing that fundamental shift—that step change in technology—coalesce around a few suppliers. It has completely changed. I probably still have one of the cardboard sleeves with a Microsoft Office subscription code in it. In terms of how the market is changing, you are going to have to change as well. Where are we going to expect to see a cohesive sourcing strategy that recognises the new world that you are operating within, with regard to the technology suppliers?

I have a couple of things up front and then colleagues should add to this. I really recognise that that is currently a gap. We have not yet published a sourcing strategy, and we need to. That is one thing that is high up on our agenda. We have seen changes in the way our supply chains want to charge, bill and work with us—simple things such as moving more to subscription-based approaches. We have seen a big shift from capital expenditure to much more agile resource expenditure. That is a massive thing in the way we go about procuring and managing cost. We have seen much more diversification in the services and the pace at which our supply chain wants to work with us. We have done some quite big deals, as you know. We have recently had a strategic partnership agreement signed with Microsoft globally. We are one of its biggest customers in the world. We wanted to make sure that every single part of the UK public sector had access to the very best possible rates. It is not a big contract. It is basically a framework that allows us to leverage our position as one of its biggest customers to get bulk discounts, in effect, on its products and services. We would like to explore doing that with other suppliers so that we can leverage the scale of what we are doing with the supply chain that we work with the most. That is just the start, and there is more that we need to do.

As the Report calls out, but also as reflected in our state of digital government review, we recognise that we have not defined that cohesive sourcing strategy. As you point out, sourcing in digital at the moment is probably more complicated than it used to be. It used to be an old buy-versus-build choice, and now it is much more buy, build, partner, procure, innovate and so on. One of our priorities for the digital commercial centre of excellence is to jointly produce a really clear digital sourcing strategy that will have multiple parts but two big things. The first part will be really clear steers to Departments on when it makes sense to build things ourselves and when it makes sense to buy from the market. The second part, which goes to the point you made, is strategies for approaching different parts of the market. We recognise that the technology market has shifted. The big platform providers—people who provide cloud and office suites and so on—have different business models and incentives to the big systems integrators and consultants that run projects. They are also different from the people who ship us hardware and make a margin on hardware. Our approach to getting performance for each of those has to be tailored to their business models. For those big platform providers, that is the reason why some of those 19 providers are in that list of 19 providers. Those are the people who respond best to a joined-up voice from the centre of Government.

I have a couple of final points. Once you have implemented this strategy, you have to measure its success. I would be keen to know how you are going to measure success, but also whether you are alive to the need to use the leverage of the size of the contracts to evolve the contracts in a way that possibly suits our business model, not necessarily the big tech companies’ business model. If we get that right for what we need, we can have an impact further down the economic supply chain for the others that are having these problems or concerns when it comes to the possible imbalance in the relationship with big tech.

The short answer is yes. Part of the reason that, particularly when we are dealing with big players, we really want to aggregate our demand and voice, and buy once as much as possible, is precisely to do that: to shape their offerings. For example, Government have particular needs around security, privacy, data control and so on. We have a right to require that our providers in that space do things that meet those needs. That often pushes them. It pushes the envelope of what they do for other clients. We are not shy about making those demands to make sure that we get what we need and that they are shaping their offerings to meet our needs.

Do you have a timescale for this? Can you talk a little bit about the timescale for delivering the strategy and sorting out the data deficiencies that currently exist?

The sourcing strategy is partly going to be driven by the upcoming spending review and what the Government want to prioritise in terms of delivery. We are trying to twin-track it, but you can expect us to be developing that sourcing strategy over the course of the summer. I am very happy to write to the Committee to set out a bit more of a detailed timetable once we are clearer on the path of the spending review, if that is acceptable. On data, as I said earlier, we should go again and have a look at a slightly more comprehensive plan. I will write to you to set that out. I do not think that it is something that you fix overnight. It has to be part of a continuous improvement plan for data in Government. We will set that out for you. Please give us more feedback.

That is really helpful—thank you, Cat. Bringing together those two strands and that last question, David, it is all very well aggregating all these volume discounts with big suppliers and cloud suppliers—the big three, if you like—but if you do not have the data to know what the future demand is going to be, how do you negotiate an aggregated contract?

That is a good question. The Report is right to call out that, as I think my colleagues have pointed out, we do not have perfect data on what we spend at the moment. We have some good data; we do not have perfect data. Our data gets weaker as we go out in forecast. One action we will take, again through the digital commercial centre of excellence, will be working with Departments to get much stronger forecast data. That will come from two sources. There will be the investment forecast. The fact that we are going through a spending review at the moment gives us the best possible moment to derive from that what the forecast might be. Also, there are operational trends. If we take the AI space, for example, we know that people may already have procured their AI solutions. What they are spending now will not tell us perfectly what they are spending in the future unless we actually track that. Part of the work in the centre will be to build on the commercial platform launched earlier this week and to add to it things like forecast data so that we can build a reliable forecast. I have to say that that will not be simple. Building a reliable forecast for digital is difficult.

That is a really helpful answer. Cat, I am delighted that we have you with us because, given your antecedence with the Treasury, this question is absolutely in your space. Andrew, you talked about the digital playbook; I note, incidentally, that when you did the commercial playbook, you consulted suppliers. According to the Report, you did not do that on the digital playbook, which I find slightly odd.

Yes, we did, and trade bodies.

Okay. I was not aware of that. Cat, these digital playbooks, the Government Green Book and Treasury procurement rules, particularly around business cases, do not provide the flexibility that we now need to incorporate dynamic digital procurement. Are you having a conversation with the Treasury about how the digital playbook and the Green Book might be better aligned to allow for this agile procurement?

There are a range of different things within financial management and investment appraisal that we need to have and are having a dialogue with the Treasury about. It is not just investment processes, which I will come back to in a bit more detail, but also how you fund, protect and manage much more agile delivery within technology. It is not like the big infrastructure programmes that we work with, which, frankly, a lot of our processes are set up to support. I will not sit here and defend the Green Book. That is no longer my responsibility.

You could say that there need to be changes.

There are obviously things that the Green Book constantly needs to adapt to. It should never be a static model. I very passionately believe that, and I know that the Treasury does as well. There are some specific parts on technology and digital within the Green Book, and there have been attempts to make it more agile and akin to the way in which we develop technology. If you were really future-proofing your approach, you would build in much more dynamic investment appraisal and not have these large waterfall approaches. You would expect me to say this as an accountant, but investment appraisal as a concept is not something that should be lost within the world of digital and technological expenditure.

It is the way you go about that appraisal.

It is the way you use it and the way you do it. I have done this both being responsible for digital programmes and as a finance person. In fact, the finance function has technological financial experts. All they do is work with tech programmes from a finance perspective, because it is such a specialist area and you have to have different skills and ways of thinking about this. We need to grow that expertise in Government. We need to have much more agile processes. We need to deploy that guidance and apply investment appraisal techniques to work for the supply chain and for programmes that are highly loaded to technology. We need to recognise that it is much harder to predict how a technological programme is going to play out because it is so agile, developmental and experimental. That level of risk-taking in the way in which we manage money in Government is not culturally ingrained, so it is countercultural in everything that we do. There is ongoing discussion about how we need to evolve financial management practices generally. We have to make some changes.

I wonder whether I might add a comment on the Green Book point. We have done a lot of work on our business case processes. I would hesitate to defend Treasury materials, but often you are seeing a combination. The Green Book may not in every moment have been written with the fullest understanding of all the issues, but it is about the implementation. That is a matter of culture, behaviours, leadership and change management right across the system. You can do a lot. If you go to HMT and say, “I would like to make this change in the way I am doing things. It is not exactly what we used to do. I think that this is Green Book-compatible,” in my experience you will almost always get the answer, “Very sensible, yes, absolutely. That’s fine.” Everything that sits beyond and around the Green Book is the much bigger issue, in my view. We probably should make some alterations to the Green Book, but it is actually getting people to change the way they do things and not to deploy the classic cultural model that we have, in which you spend an enormous amount of time up front thinking about a thing and write an awful lot of stuff about it. You get a lot of senior and ministerial attention at that stage of the process; you then you get your money signed off and it moves down the senior priority list. We are not as good at changing, evolving, learning and driving through the programme. That is not a Green Book problem.

I do not disagree with a word of what you have said. I take what Cat Little says, that it is a dynamic process, but a little tweaking of the Green Book would send a huge signal to Departments preparing their business cases about the things they need to consider, particularly this agility in digital procurement.

It is a “yes, and”.

Yes, I agree with that.

Could I build on that, in terms of how the contracting and procurement models are trying to bring this change forward as well across the system? The Procurement Act, which went live this week, has a new flexible competitive process that has been designed to deal with exactly this type of digital programme, with more of an agile test-and-learn approach, where you might want to go to the market a number of times and stop at various points. It has been quite difficult, under the previous regulations, to do that, to evidence value for money and stuff like that. We should expect, and be driving for, much more contracting on that basis. The playbook has been updated to very much support that approach. We will be pushing and expecting to see a lot more of that type of approach through the procurement.

That is very helpful, Andrew.

Perhaps I could start and others should add to it, because I think that we have all had experiences of failed or difficult technological procurement. Stepping back, the first thing I would say is that it is very difficult to have a one-size-fits-all approach to this. If we look at the things that go wrong in some of our big procurements with technology companies, it is where we had weak intelligent client functions within Government. We were not clear about the specification and what we wanted. We did not bring the supply chain into the conversations early enough to look at what the market could deliver. We probably underestimate quite often the pace at which technology moves on, so we come up with quite a static requirement. Technology moves on. We have not built agility into the way in which the contract moves. There is always the share of risk and incentives that you have to really think through on a long-term basis, so being quite strategic about what we are trying to do. They tend to be the things that drive cost up. This is not just technology; this is across quite a lot of what we do in Government. I will not talk specifically about the Home Office case, because I am afraid I am not familiar with it. In the centre, when we look at those lessons learned, we need to do everything we can to share those lessons and work with our professional functions to make sure that they have thought it through before we go signing contracts, and that we have processes to check and test how those lessons learned have been applied. Andrew, David and Clare should add to that.

The first thing to acknowledge is that in some of the sectors of this market there are a small number of very dominant suppliers, so for everybody there is limited choice. If you want to leverage Government purchasing power for something like hosting, you need to get a number of Departments really aligned around requirements. That is very challenging to do. We absolutely have an ambition to do that more, and that is going to be one of the key parts of the new centre of excellence agenda. Of course, one of the founding principles of public procurement is competition. Departments go out with their requirements and these contracts are competed for, sometimes in a very limited market space. We accept that in some of these markets, we do not actually have as much leverage as we think we might, because there is limited choice.

I would not characterise them as unhealthy. There are some things we have been doing, and we are going to do more. We compare and pool pricing information together across the contracts we will have with some of those providers. They are part of the partnering programme, so there is oversight to try to understand how prices might change across us as a customer. We will absolutely look to see whether we can leverage that across that relationship. That goes on. Ultimately, to get the best leverage, you would do a single deal. We are saying that, in practice, it is very difficult to line up multiple customers and requirements. We have started to do that and have an ambition to do more of that, I would say. Hosting is an interesting one. Parts of Government used a strategy to try to move away and we had contracts with a local provider, which then financially went bust, so we had some real challenges and business continuity issues about 18 months ago, didn’t we, Clare? We looked at the market and tried to look at alternatives, but the dominance now is such that we have limited choice.

Apologies, I am not deeply familiar with the Home Office case, but in cloud platform provision it is quite important to distinguish between price and consumption. I expect that we will see most of our Departments spending more with the platform providers, because they are moving more workloads to that. Where that is a means of getting off some of their legacy infrastructure, we think that that is a good thing. We would rather they were consuming modern up‑to‑date services from those platforms than trying to run out-of-date antiquated machines in their own data centres. We will look into that case, but often when you see cloud cost increases it is because the Department is using the platform to do more, rather than because the prices have gone up.

Going back to what I was talking about earlier—the voice of the customer and “what is the strategy?” type signals that need to be provided more to the system—certainly David and I would share the view that at the moment the way Government buy cloud is not right. There is real work to do on that specific point. It is a place where it is being bought in a fragmented way, rather than thinking about overall capacity, how it evolves over time, peaks, gaps and those sorts of things. It is not necessarily about whether we have a healthy or an unhealthy relationship with the suppliers. I really am treading into David’s territory here, but buying cloud brilliantly is a quite specific skill, even within the digital procurement set of skills that we have been talking about today. We, as part of the centre of excellence, need to build that capability on behalf of the whole of Government, so that we can become a more modern and sophisticated buyer of cloud. The problems that you are talking about around a lack of competition—which, from a policy point of view, stepping into my wider DSIT hat, we would totally recognise—face every buyer. Those are not a Government issue. If you are a large bank buying cloud, you have exactly the same sorts of things. We need to become as good as those buyers at doing it brilliantly. I do not think that we have yet got to that place.

Could I just clarify a point that Lloyd raised? You talked about how you need to become a modern and sophisticated buyer of cloud. Do you know what that looks like? Do you have a sense of what it is and how you are going to get there?

I will invite David to answer that question.

I have spent a lot of time in the last few years working as both a large-scale consumer of and a provider of cloud. Without going into too much detail, there are a few characteristics. The first is that, as Andrew said, our goal would be to move beyond things like MOUs and framework constructs to the ability to contract once. The way cloud economics works is that being able to write a commitment to a cloud provider matters an awful lot to them, and it gives us maximum commercial leverage, so the right commercial constructs. The second would be an approach to optimisation. As Sarah was saying, one of the advantages of cloud is that you have to turn the dials up and down. We need to make sure—this is part of my team’s job, and it will be through the commercial centre of excellence—that Departments are setting the dials to the right settings and that they are not overprovisioning or over-spec’ing what they need. The reason that it is particularly attractive to fix that is that when you make those settings, it translates into cost savings the next day.

You know what it looks like, but do you know how to get there?

Yes. It will require us building more expertise in the centre and working directly with Departments to help them implement this cloud optimisation.

As well as gaining the buy-in, through a series of probably both carrot and stick techniques across Government, to participating in something that ultimately will be a massive reward for Departments, because this is about lowering their costs. It will not be impossible to do, but it will require some legwork.

I was going to say that the hardest bit of all of this is working with the customers in Departments. There are good reasons why they are doing some of the things that they are doing, whether it is a legacy system or the way in which they are delivering a customer service, and they will all have very different requirements. The hardest thing is making sure that Departments are prioritising the procurement strategy over what perhaps they might see as more important local needs.

This has suddenly energised the Committee.

This is absolutely key. You are now purchasing a service, not a given, fixed item.

Yes.

You are therefore going to have to change the whole construct of the contract that you enter into. Is that being done?

At a contract level, yes, because that is how these companies contract. One of the observations that was in the NAO Report, but also in our state of digital government review, is that, as you point out, a big chunk of the technology market has shifted from big, up‑front capital purchase, where we used to buy machines and put them in a building somewhere, to subscribing to services that endure over time. Part of the reason why we are working with Treasury on any amendments that need to be made to funding processes and cost forecasting is to make sure that we are reflecting that. We are on that journey, and not all our funding mechanisms reflect that shift in the market yet.

Once you have the contract or are buying a service, do the Departments—in the end, it is their job and they are going to be managing the contract on a daily or weekly basis—understand that they are not locked into something that is fixed over time, because they may need different things from the cloud at different points? Are Departments yet aware of that change that they need to be managing?

My assessment would be that that level of skill and maturity is variable across Departments. We have some Departments—one that I would pick out is HMRC—that have been using cloud platforms for several years and that have a very mature centre of excellence and a strong training programme and curriculum. They have it figured out. That is not universal across the system.

I really do think that it is mixed. This is a very complex and big-scale set of challenges that we are dealing with. I am confident that in the centre of Government we have some incredibly senior, experienced people who spend a lot of their time on the big strategic suppliers. Am I confident that in every Department and every negotiation we have the skills that we need to be absolutely driving forward the very best deals? It is inconsistent, but Andrew and Clare, who lead on our capability, should say more.

That is fair. To the point that Andrew made earlier about the complex transactions team, where we have 20 digital experts who we can deploy out to Departments, we also need the Departments to be clearer with their pipelines. That is something else that we have put into the Procurement Act, so we have that pipeline of activities and we know ahead of time when we can deploy those people there. Following Cat’s point, it is mixed, but we certainly have experts in the centre who we can use to support Departments.

It is clearly dependent and clearly inconsistent, and I will look into that case for you with the Home Office.

I will not comment on that case, but I do think that there is the right expertise in the centre, as long as we know that these deals and negotiations are happening. It goes back to Clare’s point that we are not going to capture absolutely everything. We have lots of processes in place to ensure that we try, so better pipelines and better controls. All our big expenditure comes through very rigorous centralised processes, but we are not going to catch every single thing. We want to do everything that we can to make sure that that is the case, but 100% risk management is probably not our aim, if I am frank, because there is going to be a limit on how many people and experts we can flood into the system at any one time.

There is real variability in the size of the customers as well. Take HMRC or DWP, which have such a big cloud hosting requirement. We are much more confident that those large Departments have really dedicated experts who really understand the market and their leverage. There are wildly different scenarios across Government, and across the public sector, of people for whom this might be their early steps. They are much smaller users and absolutely will not have that leverage in the market. What we are trying to do, similarly to the Microsoft deal, is some kind of floor pricing for the whole of Government and for those much smaller users, so that there is a minimum deal that could be available to everyone. We then expect the big, heavy user Departments, with much bigger demands and more expertise, to strike their own deals. That has been the strategy so far. What we have been talking about is whether we can bring much more of that together and the challenges to bringing that whole floor up.

We are going to take a short break. Thank you all very much for what you have done today. We will come back to some really important subjects, such as skills, after the break. Sitting suspended. On resuming—

Andrew Forzani, you clearly have a lot of skilled people in the commercial part of Government, but most of them are not digitally skilled, are they? Is that a problem when you are dealing with suppliers of digital services—it is not really equipment, as we discussed before—who are both commercially and digitally skilled? Is there an imbalance in the relationship?

We have talked a lot about the cadre of 6,000 commercial staff across Government. As I said, they are spread right across Departments. Most Departments split their commercial resources by category of what they buy. There are absolutely digital specialist commercial teams in all the Departments. All they work on are those digital categories of spend, and they are the procurements that they do. Do we have the right level of digital capability across the whole function? No, but I am confident that we have pockets of deep expertise working on the biggest digital programmes.

That means that a lot of procurement could be going on with a digital element. We discussed before how digital is taking over much of the world in Government and therefore much of the procurement. Some of that procurement is being done by people without the digital skills, is it not?

When we have those larger change programmes, where we know that there is a strong digital element, we will try to recognise that in the commercial support that goes there. I talked about the complex transactions team earlier, so we do have a kind of hit squad who are supporting a lot of the large digital change programmes. On your question about whether we are being outmatched, on the largest deals and programmes we have good capability. We need to do more to bring the level up across the whole community.

That is interesting, because I will then go on and say, “You are not doing it, are you?” It is interesting that the NAO says in its Report, “Government does not have training for digital commercial skills. In 2023, GCF launched a ‘digital commercial development programme for senior commercial professionals’”. That is a really good idea, except: “The programme focuses on leadership skills, business acumen and commercial judgment, but was not co-authored with the digital profession and does not emphasise the need for specifically digital commercial skills”. Why? Is that not a big gap?

There is a significant amount of commercial training and development that goes on across Government. Some of it is more general and will apply to all complex outsourcing and procurement services. I would argue that a lot of those key skills of understanding the market, putting requirements together and negotiating with suppliers are the broad base of commercial skills. We have absolutely recruited in specialist digital commercial skills, and they sit in those specialist teams. We would accept that there is more for us to do. As you say, because digital is now at the heart of almost every procurement, we need to do more to build that across the base, and that is absolutely part of what the centre of excellence will start to look to do. The point that I would make is that it is not just commercial people. These are multidisciplinary teams, so it needs to be much wider.

I was just going to add something about the DDaT playbook. As part of that, we have an implementation programme where we roll out the upskilling, not just for commercial staff but for anybody touching one of those programmes. Where we have the complex transactions team going in and doing those really complex deals, we can provide and have provided training to some of those smaller programmes across Government. Last year, we did deep dives with 1,500 staff across Government, and also supported 30 of the smaller procurements that the complex transaction team would not necessarily have gone into. I take your point, and there is more that we can do, but we have been doing support across Government already.

You are going to give serious consideration, then, to building this element into future training programmes.

Some of it absolutely exists in Departments. We know that Departments have really good training offers around the impact of AI, how to buy AI, software development, procurement and so on. What we have not done, and I do accept we need to do, is to develop some of that into core digital commercial skills across the whole community. That is absolutely a priority for me.

Just to be very clear, the answer is yes. We will definitely do that.

It is always helpful to have a clear answer.

I would just add two things to what Andrew and Clare have said. First, to refer to what Sarah said earlier to the opposite of the question that you have just asked, we really want our digital and commercial teams to better understand each other. That does not mean that I want to replicate the sort of skillset that only a digital professional can have. The key to it is this working together and better understanding how that partnership can leverage procurement in this field. Secondly, the upskilling of the whole of the civil service plays a really big part in this. Quite a lot of the things that we are alluding to here are skills that the whole of the civil service has to get to grips with. So much of our future world, and the world that we are in today, is about technology and being intelligent customers and users of it.

That is interesting. Just to follow up on that, we talked before about how when you are buying a digital service on the cloud, you are buying not a one-off but an ongoing service over a number of years. There are people in Departments who are going to be managing these services and indicating what they want differently from them each year. Are they aware of the change that has happened and is happening, or are people still sometimes locked into past ways of doing things? Is there a challenge there? Is there a training issue there? Is there a cultural issue there that you have to get to?

There is, but I would refer to what David said earlier. The Departments that have been using cloud and some of the more advanced technology in their work—particularly HMRC and DWP, so our really big workforces—are much more savvy and intelligent users of technology. We are talking about wholescale skilling, capability and culture improvements, and there is still quite a lot that we need to do. If it is helpful, I can talk about some of the things that we are doing for the whole of the civil service, but it is still inconsistent.

In the digital profession, we have a reasonably mature training curriculum programme. You heard from Andrew and Clare that there is a mature training curriculum programme in commercial. We still have to bring those together and say, “For all those people in those professions, we need really strong commercial for digital people, and digital for commercial people, that gets people accredited and qualified to do this well.”

Saying that we should work together is one thing. When I was asking Andrew and Clare about whether there were skills there and what more you were doing to skill people in the commercial field, you never once mentioned going to David’s team for advice, support or building relationships. You may be doing it; it is just that, instinctively, you did not refer to that.

I mentioned earlier that the DDaT playbook has been developed in conjunction with David’s predecessor. Through the new digital centre of excellence, the refresh of that will also be done jointly with David.

In our digital centre of excellence set-up, we are going to have our people co-located together and talking to each other—constantly, I hope—about how we work and partner together in different ways. My expectation is that that will be the powerhouse of that partnership. Maybe we have not mentioned it because it almost goes without saying that we cannot possibly develop some of the tools that we need for our commercial function without the input and the expertise of David and his team. The whole point of having that centre of excellence is that we have a much closer, partnered approach to all of this.

Are there ever any disagreements between you?

Yes.

Who is in charge of resolving them?

The reason we have disagreements is that, unsurprisingly, people with different perspectives end up disagreeing. It is a sign of a healthy team. The first port of call is within the team, to figure it out between us. If we need a referee, we have people like Cat and Sarah to help us, but the first port of call is to resolve it within the team and get on the same page, particularly when we are heading into negotiations together.

Do you have any disagreements on overall strategy?

Not on strategy, no. Writing the full digital sourcing strategy is still a thing to do, but in the teams that I am working with—Andrew’s and Clare’s teams—we are aligned on what we need to do. When we get to writing down the nitty-gritty, I am absolutely sure that we will have healthy and robust arguments and different perspectives, and we will attempt to resolve those within the team.

We do not have differences of principle in the approach that we need to increasingly move towards.

One thing that I would add is that, ultimately, our Ministers are responsible for signing off the strategy, so our job as officials is to have healthy debate before we provide advice and to flush out and expose that debate and the choices to Ministers. Ultimately, Ministers have to be confident that we have had a constructive and healthy tension in coming to the right advice.

Cat Little and Sarah Munby, in the blueprint for modern digital government the Minister was very clear when he said, “Raise the digital skills baseline for all public servants.” That means from permanent secretaries downwards. What are you both doing within your teams to implement that?

I will start with the civil service as a whole. Forgive me if I repeat a little bit of what I said to you previously on AI, but we really recognise that technology, AI and data are a suite of tools that we have to consistently upskill across the whole of the civil service and the public sector. For the civil service, we have recently done our One Big Thing training events. We have done data. This year, we have done innovation. Data had 209,000 civil servants go through that training. It is one of the largest singular training exercises to be undertaken, I suspect, anywhere. This year, we have innovation, and we have had 143,000 people go through innovation masterclasses, which talk about technology, ways of working, test and learn, experimentation, how you use technology in problem solving and how you manage risk. A lot of this comes down to risk management and the approach that we want civil servants to take. We have also been doing wider and targeted training for our senior leaders. Permanent secretaries have had two away days on AI. We can give live feedback on whether we learned anything. Personally, I would say that we probably have a lot more training to do, and I very much welcome it. For our SCS, we also have dedicated tech training, which is available on the civil service learning site. The other side to this is how we recruit and upskill people coming through our programme. We have TechTrack, which is our tech apprenticeship scheme. We are aiming to significantly increase the number of people who are coming through TechTrack. Our fast stream scheme has dedicated technology components to it. We are doing lots of things. If we step back and ask, “Is the sum of the parts enough?”, we always get to the answer that there is more that we can do. One thing that I am working on at the moment is the core curriculum for the civil service and how we embed technology through absolutely everything. Are we doing things? Yes. Is it sufficient? No.

The real question is, “Is it working?”

It is really hard to evaluate. Genuinely, skills are quite hard to evaluate. What you really want to do is to ask, “Has it changed the outcomes in delivery and value for money, the way that we purchase things, and the solutions and the outcomes that we are achieving for the public?” This is a notoriously difficult thing to evaluate, but we are trying to build, and will build, through our evaluation taskforce, more evaluation into what we are doing when it comes to our skills agenda.

Sarah Munby, what are you doing in your organisation?

If you look at it narrowly, our organisation probably has a slightly different context. The majority of our people are working on these issues day in, day out. We adopt all the things that happen civil service-wide and seek to be an exemplar of making sure that that happens. The bit that we are most importantly responsible for, as well as making sure that Cat’s teams who look at capability more generally have the absolute best digital content to fuel all those strands of work, is developing the profession. We talked about the need to expand the number of people who are not just literate and intelligent on these topics, but genuinely expert, within the civil service. David, I do not know whether you would like to say some things about what we are doing on that side: the work on pay structures, training, and moving people from data to AI.

Our capabilities team within the Government Digital Service looks at the whole digital workforce across the system. That includes things that have already been mentioned, such as the TechTrack apprenticeship scheme to make sure that we have people entering the profession, but also leadership and technology programmes, which we make available to as many people as we can to help them grow the profession, as well as programmes of secondments to bring in external expertise.

Andrew, it is your bit of the organisation that I really worry about. What are you doing within your Government Commercial Function of 6,000 people to make sure that all of them have these digital skills? This is the only way that the Government Commercial Function is going to adapt to the new way that we need to procure in the digital sphere. What experience and training have you had in the digital field in order to give an example to everybody else?

I am only on day four in the new role, so I will draw on my Defence experience over the last few years. As a Defence leader, we have gone through a digital college process over the last two years. All the senior leaders, including the perm sec and all the directors general, in both the civil service and the military, have gone through a digital leadership college. That has been not just about getting us to understand the technology at, initially, quite a basic level, but about, “What does it mean for you as a leader? What are the changes that it will bring about in the way Departments and businesses will be run?” We have spent six half days over the last two years across the Ministry of Defence. It very much opens your eyes to the scale of business change that will happen. Then you take that as a champion, and you look to see how that is being reflected across. If I just draw on defence experience, very much in the commercial area, we have kicked off a lot of initiatives around, “Do we understand our policies on AI? How will they be used in the procurement process? How will they be used in proposals? How are we training our people to procure AI? How are we using software development?” There is a digital commercial deep expert team in MOD called Commercial X, which has been running for about the last 18 months. It has done things like dragons’ dens to try to find new SMEs, and is very much at the cutting edge of digital technology. That is a team that I stood up of about 60 people. In terms of bringing that experience into the Cabinet Office, I will refer to the answers that I gave previously. There are pockets of deep expertise, which has partly been recruited in, so they have had experience of working in private industry, where big companies have made some of these moves already. As the big Departments have started to move much more into cloud hosting and to buy software as a service, those teams have had to react to that and to recognise that it is a different way of contracting and of buying.

You must have thought about this. I appreciate that you have been in the job for a relatively short time, but within your organisation, surely you would like to think to yourself, “Every single one of my 6,000 employees, when they come to work each day, is thinking about what element of their work relates to emerging digital technology,” rather than the traditional way in which some of them have been doing it differently for years. How are you going to bring about that sea change so that your organisation really does incorporate the digital way of working in the future?

I may need to give a simpler answer. I completely agree with you. We have some areas of deep expertise that are already there and understand it. My priority is to bring the floor of that experience up across the whole 6,000. That is about how we have a digital thread across all of the commercial training going forward. I would be very happy to set that out to the Committee.

If you could set it out with some milestones for what you would like to have achieved and by when, so that we can track this and see how it is working, that would be really helpful.

I would be very happy to.

The language that we use is incredibly important. We talk about this as having a thread of digital, as you said there, through the programme. We talk about digital natives and digital migrants. Most of us here are of the age where we grew up in the analogue world and have moved to the digital world. We expressed that movement from analogue to digital in these terms, and we learned from that. We seem to be moving from a basic digital world to an evolved digital world. It feels like we are going through that migration period, but I wonder how much the act of moving from one to the other is causing some of the problems. We are all using different language to describe the journey that we are on and to help us get to that final destination, which is fine, culturally, within teams and Departments, but there are certain areas where, if we can sort it out more quickly, we should be able to help that migration, and one of them would be around procurement. Are we migrating the procurement side of this—and you are almost the vanguard of the expeditionary force to help us get to that place—at the speed that we need, in our approaches and your approaches as senior leaders, to make sure that that journey is being as efficient as it can be? I hope that I have not taken that metaphor too far.

We really agree with you. The procurement and commercial teams can be a catalyst in the change that we have to make, and we are certainly very committed to making sure that that is the case. As I said earlier, there is much more that we need to bring together, which we will write and pull together into a plan for you. Fundamentally, we have to build on where we are. We have to recruit some different skills. We have to change the culture. We have to step up the skills and the training programmes that we have. It needs to be a comprehensive package that we can stand by and deliver. Given that Andrew is only four days into his role, and we still have quite a lot of work to do, I hope that you will give us the grace of setting it out. I am sure that we will be back to talk about it.

Take your time. We are not asking for a rushed reply on this.

We want to do it thoroughly.

We do appreciate that Andrew has just taken up his role.

It is worth mentioning that the Government Commercial College is online. It is something that we are very proud of. We are second in size only to the Open University, so Andrew certainly has a channel available to him to drive and land his message across the Government Commercial Function.

I just wonder if I could add one reflection. There is a slight risk that we talk about the analogue-to-digital shift as though that is the shift that we are managing here. It is true that in some places we still have parts of Government that have not been able to reach today’s standard of operation. That is what the “State of the State” report shows. To the questions that you were asking, Mr Betts, about whether people have not spotted that there is a change, it is not that we have people who are going, “Ooh, cloud.” It is more that they are managing complex legacy environments and all those sorts of challenges. The thought that I want to leave the Committee with on this point is that, at the same time, we are in the midst of an uncertain but profound technological shift around artificial intelligence, which is going to be a change of a magnitude—whether similar, somewhat less or somewhat more—that we do not know. There are people who are everywhere on that spectrum, right through to, “This is as profound as the industrial revolution,” or more so. We are not just trying to bring people up to an acceptable standard for having done a better job on delivering some of these historic programmes. The bar we need to seek to very rapidly move towards is to be able to deliver the next generation of programmes that are going to be upon us very quickly. I say that totally understanding and appreciating the challenge that that represents, but I do think that that is the scenario that we, along with every private sector organisation dealing with similar challenges, are facing.

If I might add just one very quick thing—I am conscious that we are tight on time—I very much agree with what Sarah said. One of the biggest challenges that we have in the civil service in particular is the fact that the tech that people are using in their personal lives is accelerating much more quickly than some of the tools and technology that we are giving our people. As this Committee knows very well, that is because of the legacy technology that is pervasive across a lot of what we do. AI is not only a game changer, but will allow us to, I hope, more rapidly give our staff the tools that they have become used to in their everyday lives outside work. We have to raise the standard of the environment that they are operating in. Otherwise, they can be as trained as you like, but if we are giving them green-on-black technology to use in the workplace, that is not going to be sufficient.

We have talked a lot today about what your two Departments are doing. This touches on the work of your Department, Sarah, because you are the Department that interacts with all the other Departments on this digital transformation—let us call it that—and they are very variable. We see this in hearings in this Committee. What are you doing to try to embed a culture that says, “We have to incorporate digital in everything that we do”? It comes back to the very simple thing that I asked on the AI hearing about having CDIOs at a senior level in every single Department. It does seem to me that the culture within Government is still not there at the top levels to encourage this transformation that we need to see taking place quite rapidly.

We talked about that, as you say, at our last hearing here. In the blueprint, we talk about every organisation having a digital CDIO or otherwise sitting on their most senior departmental committee and their exco, and also having a digitally appropriate non-exec on their board. Getting the right people into those rooms is, of course, not the whole answer. We have also said that that needs to be reported on. It is going from an aspiration to a programmatic intent around ensuring that that happens. In that blueprint document, we talk about the full spectrum of what needs to change. There is quite a long list of changes that are required, around the skills that we have talked about, around leadership, which is this point that we are just discussing, and around funding mechanisms. This procurement component that we are talking about today is a really important slice, but we will not get what we need unless we are doing all the other slices as well, which is why we have tried to lay out that comprehensive approach.

Cat Little was quite right that your two Departments cannot be everywhere, but the Departments that are running these procurement programmes should be on top of this. It does seem to me that the digital specialists are often brought in far too late in the procurement programme, by which time the scoping has been done. Largely, what you want to achieve has been set before the digital people are brought in. Then, of course, they are within a constraint, and so they cannot procure in the best possible way, because the whole environment has been set. What are you going to do to change that culture within Departments?

I will give a trivial answer, if I may, just for a moment, because I do think that it is profoundly important. It is partly about culture; it is also partly about political intent and focus. The intent of the Cabinet, supported by the IMG that we talked about last time, and what it is they want to make happen, really makes a difference. We are seeking to inject not just better bottom-up skill building and process change, but top-down leadership on these topics. Although it sounds trivial, in my experience of Government, that is the single most powerful lever, and we are deploying it at maximum use of the lever at the moment. That will make a real difference.

Why is there not a commercial digital function in every single Department?

What you are describing is there, in the sense that within the commercial teams there will be a set of people who are specifically specialised around digital.

Will there be a set of commercial people with digital skills in every Department, Andrew?

I don’t know, to be fair. Certainly, many of the large Departments, and those with large digital programmes, report not only functionally into me, but into the CIO or the CDIO. They will be very close. Those commercial digital teams that I described before are very much sitting in the digital part of the Department.

Your answer has worried me. I heard this earlier about the big Departments that use a lot of digital and AI skills. It is the smaller ones that I worry about. It is the DEFRAs of this world, which have a lot of legacy equipment and are not very good at procuring and designing their digital programmes. We have seen some quite significant mistakes because of that. What is your Department doing to cover every single Department of Government to make sure that they are up to speed? David, I might ask you to come in on this afterwards, please.

It builds on our previous conversation about skills, does it not? A real priority is going to be lifting that whole level and making sure that it is consistent across Government and all Departments. That is the plan that I need to come back to you on.

I accept that, but it is not just about skills, is it? Take the case of DEFRA and all those legacy systems. It is about updating the whole of their systems. Do you want to come in on this, David?

You are right to point out that often the challenges and the ability to meet them are not evenly distributed. The people with the biggest challenge are often the teams who do not have the scale to address that. When we did the analysis on skills distribution, we found that some of the bigger Departments are better served with skills than some of the smaller ones. There is no easy way to address that. I have talked about all the training and apprenticeships. We are trying to make sure that we get the right people to the right place and that there are fewer pay differentials between Departments for DDaT people, so that they do not feel inclined to go to different places and move around within Departments. The other thing that we try to do in the centre, which is necessary but not sufficient, is to convene communities of those Departments, so that we do not have all the expertise, the experience and the solutions locked up into one Department. Even if they do not have the people, we can take patterns, learning and solutions from one Department and promote them to others, but that is not enough on its own.

It is also worth saying that the programme that we talked about last time, as described in the blueprint, is about trying to address legacy technology. It is a really important enabler of everything that we are talking about here. On the one hand, I am asking you to move to the absolute cutting edge and operate next-generation systems, because they are going to be upon us much more quickly, so you always have to be chasing the frontier to some extent. On the other hand, you are dealing with some of the most challenging legacy systems that exist across the country, let alone across the public sector estate. There are not just digital skills. There is a lot under that. You are asking people to be able to manage a whole series of really quite different challenges. We need to eat up some of the legacy issues simply to create the capability and the capacity to be able to focus on some of the reforms that we are talking about. The reality of what is happening at the moment takes up a lot of time, energy and skill. By the way, these are very scarce skills. AI skills may be rare, but are at least being created at a dramatic rate in the external world. Some of our biggest skills challenges are about people who are able to understand and deal with systems that are out of support.

The question was both generic and specific, if it is possible to have a question that is both, to Andrew. As you are saying, David, the big Departments are regularly using all of this digital stuff. They are getting into AI. They have the skills. The question that I was asking Andrew goes right across Government. It is particularly the smaller ones that I am worried about, because they do not have the skills, and they have a lot of legacy equipment. Sarah and/or David, what are you doing to shine a light into these small Departments to make sure that they come up towards the standards in digital of the bigger Departments?

One of the things that we are doing in the new GDS is trying to put what we already do on a more structured basis. We have a lot of work where we bring together digital leaders from across Government. That is not just the big Departments. It is worth noting, by the way, that this is not about size of Department; it is about size of digital estate. You could be a large Department with a small digital estate, just for clarity. We do a lot of that already, but now that we have brought together the various digital functions, that really helps and allows us to set up a more structured account management approach, which might sound a bit strange in this context, but it means that if you are sitting in the Energy Department, as a good example, you are not trying to deal with multiple voices from the centre. You know where and who to go to. You have somebody who you feel understands your set of issues, can help you navigate the GDS offer, knows how it interfaces and has a full picture of the service. Perhaps this is my consulting days talking, but it is about having that relatively disciplined, structured account management approach so that you do not miss bits of the picture. The other thing that I would point to, which we talk about in the blueprint, is what we call earned autonomy. Essentially, this is about trying to modernise the way we do controls, so that you are not putting everybody through a chopper; you are using outcome-based metrics to look across the system: “Is it really true that Department X is doing a great job? Can we see it? If so, let’s spend less of our time worrying about what it’s doing”. There are some places in Government that, at any time, are really challenged. That may be partly capability issues, but it may just be context. That is where our scarce expertise should be focused. That is why it is so important to have metrics, transparency and an outcome-based view of what is happening right across the system on a Department-by-Department basis. At the moment, we are working on, in essence—I forget now what we have called it—a scorecard for digital procurement across Government, to enable that focus. You do not want the centre to shadow every single team right across Government. That would be ludicrous and very expensive.

Just to add one thing on where we are shining a light on legacy in particular, we are going through the spending review process at the moment. Cat mentioned that, for the first time, we are doing a proper zero-based budget review. We have included in that a set of categories for digital spend, including insight on how much is going on legacy systems and risk remediation. First, that will tell us how big the problem is. Secondly, it will allow us to evaluate, as we start to receive the investment bids shortly, whether the proposals to address those legacy systems are matching the size of the problem. Where there is a gap, knowing the problem does not solve the gap on its own, but it at least gives us a place to start.

The Departments make the bids in the spending review for more money to get rid of legacy systems or to buy cloud capacity, whatever it is. Who evaluates those bids? Is it you, David, on a technical basis, who says, “Department X needs this and is so far behind that this is a reasonable bid”?

In each recent spending review, since GDS and CDDO came into being, the level of engagement in the spending review process has been increasingly close. This time round, we worked very closely with the Treasury to send out guidance to Departments on how they should structure their bids. Within GDS, there is a team that will be calling in the right technical and commercial expertise to evaluate, “Is the money going in the right place? Is it going to achieve the outcomes?” Importantly, are there places where we are seeing 10 Departments all trying to do the same thing, where there is an opportunity to align them and make that investment once?

This is perhaps an invidious question with your boss sitting next to you, but do you feel that you have the number of people and resources to be able to do what is quite a big task there?

It is quite a big task. We have mobilised the team. To be honest, this is pretty much the job of the core part of GDS for the next few weeks, because we are right in the middle of this process at the moment. If we were doing that every single day, we would not be able to do anything else. We have enough people to do the job that we need to do right now for the spending review.

That is very candid. Thank you.

Cat Little, you were talking at the beginning of the session about the new Procurement Act, which has just come into force, and the difference that it is going to make. Can you expand slightly on how or whether this is going to make digital procurement easier?

Andrew and Clare are the experts, so I will ask them to add to this. The Procurement Act is about giving us much more flexibility than we had before to tailor the way in which we buy, in the simplest possible way. It is meant to be able to allow us to work much more closely with SMEs in particular, because it gives greater flexibility for them to engage in our procurement processes. When we apply just those two basic things to how we procure technology, it is a really fundamental shift, because so much of what we want to do, particularly with AI and new technology, is being generated by quite small and medium-sized suppliers. We want to engage with and learn from emerging technology, so that change in the Procurement Act will have a very direct impact on SMEs in our tech market in particular. I also go back to this challenge of how you design procurement processes that are not rigid, but are a bit more flexible and bespoke to the different needs of our customers in the supply chain. The Procurement Act gives us the basis to do that, but Andrew and Clare have been involved for many years longer than I have in designing this.

They are the two key things. It is flexibility—

Can I just intervene? Can you give me an example of what this greater flexibility is and how it will support, in particular, the digital procurement that we are talking about?

We have talked a lot about a shift away from legacy IT systems and how we think AI is going to change. We are moving much more to a small-scale test-and-learn approach. How can we apply small apps and systems in different parts of business processing? Given the flexibilities in the new Procurement Act, we have a new procedure that, essentially, allows you to very much start with a blank sheet of paper, design for much earlier engagement and do small-scale test and learn.

And engagement with suppliers.

Yes. Part of it is much more transparency, so much earlier notice to the market. We have a new digital platform, which we talked about earlier and which has gone live. That gives the market much more information much earlier, so Departments and contracting authorities across the public sector will have to give more information to the market. We hope that that will generate much more transparency and exposure to the market. We will know much more about those opportunities. Our fear is that there are a lot of digital suppliers that find it too difficult to access Government contracting. These flexibilities are about smaller and quicker test-and-learn approaches that will allow you to then deploy and operate at scale. With the current procedures it is quite difficult to do that, because you need a clearer outcome in the contract and the way that you go to market. We have given a lot more flexibility in that. It will absolutely be suitable specifically for these types of digital programmes. Along with the type of supplier that we are trying to encourage, those are the two big features.

And specifically SME suppliers. This is not a purely Government issue, but there are some big players, and that really does squeeze competition. Are there opportunities to be engaging with the SME sector? How do you hope to leverage that?

A national procurement policy statement came out to accompany the Act, which gets Departments to set their own ambitious direct SME spend targets going forward. I know that Departments are working on that at the moment. We hope that the combination of the two things—Departments setting much more ambitious targets to contract directly with SMEs, not through the supply chain or through primes, plus these new flexibilities—will absolutely give that. Another little technical feature is that a lot of Government procurement goes through frameworks. These are let by the Crown Commercial Service and other Departments, and they set some price and conditions that the public sector can call off against. We are making them more dynamic going forward. A criticism from SMEs will be, “If I don’t get on to your framework and it runs for five years, I have been blocked out of the market.” We are making them dynamic. The Act says that they have to be reviewed every two years, so there will be the opportunity for suppliers to leave and join those frameworks. A lot of the changes have been looked at through an SME lens. That is partly a recognition that, in this agenda that we are talking through today, there will very much be a different type of supplier that we want to be working with.

Ms Gibbs, you talked about playbooks earlier. What about the current digital contracting playbook needs to change to make it fitter for purpose? How will the changes that are coming in as a result of the Procurement Act change your playbook to, hopefully, get to some of the outcomes that Mr Forzani is talking about?

The playbook talks about how we manage, procure and assess our contracts and suppliers. What it will not do is say how you apply the Act. It will then say to you, “Go and look at the Act.” We do need to reflect in the playbook, as Andrew set out, how we can be more agile in those innovations and how we scale up. What I would also say around the training on the Act is that we have put in place a pan-Government knowledge drop. We have had 84,000 people review that knowledge drop already. We have accredited over 16,500 commercial staff on the Act going forward, and we have a programme there. There is more that we can do, but we want to make sure that, as we update the digital playbook, it is done in conjunction with David and we bring it into that centre of excellence so that it is really fit for purpose, not just from a Procurement Act perspective but in terms of where we want to move forward in the digital landscape.

Mr Knott, is the playbook a primary tool for driving through some of the change that we want to see here?

We mentioned two things: the playbook and the digital sourcing strategy. Again, they will both be joint productions. The digital sourcing strategy is very much the what: “What do we want from the market? What kinds of things should we be buying?” The playbook is very much the how: “How do we buy well and manage well?” To build on what Clare was saying, we agree that there are a few things that we would like to emphasise more. We have talked here about making sure that there is really clear guidance on joint commercial and digital leadership for that procurement. Secondly, it is about making sure that we are describing how things should work across the lifetime of the relationship, not just up to the point of contracting. We have also been talking about having a bit of guidance in there about what you do when things go wrong, because quite often, no matter how well contracting is done, there are always problems, so it is about how we deal with that in a constructive way.

What sort of external expertise will you be seeking to inform the updating of the playbook?

As Clare said, there was industry consultation in the last version. We want to hear from the people we are working with as well. It has to be something that works with both sides of the market. We will also consult widely with Departments and seek general commercial expertise from industry, as in industry buyers as well as industry vendors.

So all parts of the industry, presumably, across big tech and SMEs.

Yes, exactly: SMEs as well as big providers.

David, we have talked today about procuring contracts, but what we have not talked about is the follow-up after those contracts are awarded. In your guidance on managing the commercial lifecycle, you identified a need for organisations to improve how they actively look at the quality of performance and delivery to supplement routine monitoring. What are you doing within CDDO to encourage Departments, when they are procuring, to do that? So often, we see the bits that relate to that cut out of a contract on the basis of cost saving, but that is a short-term measure that should not be allowed to exist. What are you doing to encourage this after-monitoring?

There are three tools, which are guidance and policy tools, so they have to be accompanied by embedding, education and controls. As I mentioned, the sourcing strategy will have different approaches to different parts of the market, because getting that post-contracting performance is different, for a big consultancy firm delivering a programme, from what it is like for a cloud platform that is going to be providing commodity services over years. It would include guidance about that. We want to expand the playbook to address the full lifetime and how you manage that, including when things go wrong. The other thing is that we have a wide range of more technical guidance. For example, our secure-by-design standard says, “This is how you should be building secure systems from the outset.” We will be mandating for and evaluating providers on their ability to stick to those standards. We are not just saying, “Build us a thing”; we are saying, “Build us a thing that conforms to all the standards, approaches and controls that we would have if we built it ourselves.”

That is very helpful. Can I take both permanent secretaries, Cat Little and Sarah Munby, to the really important question of the overall skills requirement within Government, which is admirably summed up in paragraph 2.21? To save you looking at it, it says, “We have not seen evidence of the centre of government undertaking a formal assessment of its digital procurement capacity needs. Over 28,000 people work in the digital and data profession in government, around 5% of the civil service workforce in 2023. In an area as important as digital procurement, it is essential that government has a clear view of the skills it needs, the gaps and the actions required to fill them. Similarly, we have not seen evidence of a government plan in relation to recruiting and retaining people with digital procurement skills.” Can I ask both of you what you are doing to address that?

I would say two things. First, Sarah talked earlier about earned autonomy. We need to make sure that every single function has an assessment of capability in order for us to drive a different approach to controls and assurance. We are currently looking at annual assessments by function to allow us to do that. The second thing that I am working on, and hoping to bring back for all Departments, is a much more classic departmental capability review. We need to bring those back in order to understand what the landscape looks like.

How long will that all take?

We are currently working through it. We used to have them—this is before I joined the civil service—and they seemed to me like a very sensible thing, which is for every Department to set out, “What skills do we have, what do we not have, what are our gaps for the future, and what are we doing about it?” I do not think that it will take a long time to implement, but of course making it work effectively and then being able to do something about it is the much harder thing. I certainly intend to bring those back in short order.

Are you able to put any timetable on doing the assessment? I agree with you that the follow-up and implementation are much more difficult.

We are currently working it through with colleagues across Government. Of course, it is very easy for the centre to say, “Go and assess your capability,” but you need to ensure that the people assessing your capability are the right people and that you have the right standards. All functions have standards, but we need to make sure that we are doing this in the right way and that we know what the follow-up is. Again, I am very happy to write to you once we have a fully developed plan, but that is certainly the plan.

Sarah Munby, do you have anything to add?

The only thing that I would add, just because it has not come up in this conversation but is another thing we talk about in the blueprint, is that in some cases we are procuring when we should not be. We know that we have too few digital professionals in Government, partly because we have too many contractors in some spaces. It is worth noting that our strategy is not just about displacing civil servants who are not digital professionals in favour of those who are; it is also about, in some cases, displacing external activity in favour of better value and more embedded long-term expertise in the service. It is a side point to what we have been discussing here, but it is relevant because it is harder to buy badly something that you are now able to deliver and learn from in-house over time.

My guess is that that number is not going to be sufficient. Government as a whole are going to be needing to recruit a lot more digital and AI specialists. I am just wondering how we are going to do that, right from encouraging people in education to consider careers in those areas, to apprenticeships and universities, and getting the pipeline of future skills into Government.

As you rightly say, there is a huge skills agenda much more broadly. It would be wrong to say that it is for the purpose of fuelling Government; it is for the purpose of fuelling the transformation of the economy and the industrial strategy. There is an enormous amount to be done there, and that is probably a whole other discussion, not least with DfE. Inside Government, though, the work that we have talked about on TechTrack, the work that we are doing on the digital pay framework, and the work that I talked about last time on making sure that digital professionals are at the table and feel that they have a satisfying contribution to make and are heard, is about attracting more digital professionals into Government. As you say, the numbers that we need to reach are relatively eye-watering. The number is 5.5% today, or something like that, and the decimal point might be wrong. We talk in “State of the State” about how the sorts of numbers that we need to be getting to over time will be 10% and 15%. There is a huge amount to be done, both to attract new people into the service and, critically, of course, to build the skills of the people we already have.

I was just going to say that we should never underestimate how challenging that is when every other part of the economy is doing exactly the same thing. We are lucky that we are in Government and can influence the outreach and the skills agenda through our colleagues in DfE. When it comes to pay, the attractiveness of what we are doing and that real sense of public service to draw people into Government, that is a massive challenge for us. We will jointly sell coming into Government as much as we can.

There is also the interaction with the private sector, so people coming out of the private sector, into the public sector, and maybe out again.

We have to be much more porous.

That is what I was looking for. Thank you. In your note to us, I am really keen on setting this structure to bring about a sea change within Government and Departments. How are you going to embed digital skills in permanent secretaries and more senior people in every Department, so that this whole digital aspect is going to be inculcated in every Department and area of Government? I just feel that we are not doing that quickly enough to meet the pace of change that the Government are going to need to make.

I am very happy to set out everything that we have in train, as well as the challenges, because I want to be really straight with you. This is a joint agenda for us, and it is an absolute priority. As I said, we can put in place the very best recruitment and training, but there are some things that are outside our control. In terms of the importance of culture, I am very happy to set that out for you.

The culture starts at the top. If it starts at the top of every Department, it will, hopefully, percolate down quite quickly. Thank you all very much indeed. It has been a very interesting and useful session today. The uncorrected evidence will be published shortly; we will then produce a Report with recommendations.