Explained: The UK Government's Digital Sourcing Strategy
The UK’s procurement landscape is undergoing significant changes as organisations adapt to sustainability pressures, AI-driven procurement technology and regulatory reforms. Businesses must embrace ethical sourcing, digital transformation and resilience to remain competitive in this evolving environment.
Responding to concerns from the National Audit Office (NAO), the UK Government is developing a digital sourcing strategy to modernise procurement across departments. The initiative, set for rollout in summer 2025, aims to enhance transparency, efficiency and competition in government technology procurement.
David Knott, Chief Technology Officer for the UK Government, acknowledges the growing complexity of procurement, stating: “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.”
The digital sourcing strategy is expected to provide clearer guidelines on procurement decisions, streamline processes and encourage innovation within the technology industry.
Enhancing procurement efficiency through technology
Government officials have faced scrutiny from the Public Accounts Committee (PAC) for lacking comprehensive data on technology contract spending.
Andrew Forzani, the UK Government’s Chief Commercial Officer, notes that, while the top 39 suppliers have detailed procurement data, mid-tier and SMEs do not, as their contracts are not centrally managed.
The digital sourcing strategy aims to address this by improving data collection, enhancing automation and providing real-time insights into procurement spending. These measures will reduce inefficiencies, prevent mismanagement and ensure better alignment with Spending Review 2025 priorities.
The strategy will also help departments decide whether to buy, build, procure or partner when acquiring technology solutions, creating a more structured and efficient approach to digital procurement. This shift will not only reduce confusion but also accelerate the adoption of new technologies across public services.
Cat Little, Civil Service Chief Operating Officer and Cabinet Office Permanent Secretary, highlights the importance of data in government spending: “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 to understand what it is being spent on.
“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.”
The role of the Digital Commercial Centre of Excellence
The UK Government is also establishing the Digital Commercial Centre of Excellence, an initiative outlined in ‘a blueprint for modern digital government.’ The centre will reform procurement processes, making it easier for tech scaleups, startups and SMEs to access government contracts.
The centre will focus on securing long-term IT and digital solutions for the public sector while promoting competition and innovation. By aligning procurement policies with modern technology trends such as cloud computing and AI, it aims to improve digital transformation across government departments and local councils.
Operating under the Department for Science, Innovation and Technology (DSIT), the centre will work to ensure that procurement processes are innovative, efficient and inclusive of diverse suppliers. This initiative will support the broader objectives of the Digital Sourcing Strategy, making public procurement more accessible and effective.
David outlines its priorities: “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. 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 impact of the Procurement Act 2023
Alongside these digital procurement reforms, the UK Government has introduced the Procurement Act 2023, which came into force on 24 February 2025. This legislation is designed to enhance public procurement by improving access for businesses, simplifying processes and increasing transparency.
The Act includes provisions for greater SME support, flexible bidding processes and stronger oversight. By aligning the Digital Sourcing Strategy with the aims of the Procurement Act, the government seeks to create a procurement environment that is both efficient and inclusive.
Both initiatives work towards a more competitive and transparent procurement landscape, ensuring that digital procurement in the UK remains innovative and aligned with evolving technology trends.
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