Reshaping Government’s Digital Approach: NAO’s Yvonne Gallagher on persistent failures in tech procurement

The Government’s approach to technology procurement for digital transformation is ill-suited to today’s needs, with systemic barriers hindering government’s efforts, according to Yvonne Gallagher, Digital Director at the National Audit Office (NAO).

In an exclusive interview, Gallagher highlighted key findings from the NAO’s latest report, Government’s Approach to Technology Suppliers: Addressing the Challenges, underscoring persistent challenges in procurement, senior leadership expertise, and the management of legacy systems.

The state of digital government

Government has recently published an excellent analysis of the issues facing digital public services in its State of digital government review. This echoes many of our own findings on technology procurement, and it’s important to say the digital community recognises the challenges.

We also talked to commercial specialists in government departments, many of whom have come from a private sector background and were also candid about the challenges they see in their own organisations.

A lack of digital expertise among senior leaders

The NAO report warned that government transformation efforts are frequently undermined by a lack of digital acumen at the senior leadership level outside the digital profession. Gallagher says that too often, business leaders assume digital transformation is a straightforward process that can be delegated to IT specialists.

“The whole of government transformation relies on senior leaders being more digitally savvy. It’s about understanding issues at a strategic level, rather than assuming that technology problems can be solved in isolation," she said. "Transformation isn’t just about a bit of tech - it’s about business change, and that’s where things often go wrong."

Gallagher acknowledged that digital procurement issues have been well-documented in previous reports but stressed that progress remains slow. The report criticises government departments for relying on outdated procurement methods that fail to address the complexities of digital transformation and changes in the digital commercial landscape over the last few years.

“We’ve seen commercial teams with insufficient digital expertise, often adopting a generalist approach rather than using specialist capabilities,” Gallagher noted. “Government procurement practices are still too focused on rigid contract structures that don’t align with the pace and nature of digital projects. Too often, contracts are signed before departments have fully worked out what they want to achieve.”

The NAO found that government spending on digital procurement is significant - estimated at £14 billion annually - yet outcomes are often poor, with major projects plagued by delays and cost overruns.

The report highlighted examples such as the Emergency Services Network, Universal Credit, and Digital Services at the Border, all of which suffered from procurement missteps, adding a collective £3 billion in unexpected costs to reset programmes and operate legacy systems for longer than planned.

Early market engagement

The NAO report underscores the importance of early market engagement—ensuring departments understand the capabilities of technology suppliers before finalising business cases. Gallagher described this as a major area where government is failing.

“There’s an opportunity cost to not engaging with the market early enough. Departments should have a clear view of who is actually in a position to bid for contracts and what innovative solutions might be available,” she explained.

However, as the report points out, achieving this requires significant effort and better coordination across government. Data on supplier capabilities, market trends, and internal needs must be gathered systematically - something that is not happening effectively.

One of the most entrenched challenges is the government’s continued reliance on legacy technology. While Gallagher acknowledged that low-code solutions and internal capacity building are gaining traction, she cautioned against viewing these as silver bullets.

“Government systems were developed to meet specific business needs, and many still perform those core functions. But legacy technology constrains business change. If you don’t fully understand what’s under the hood, you’ll struggle to modernise effectively,” she said. “Adding polished front-end interfaces can make things look better for users, but if the underlying systems haven’t changed, it’s a missed opportunity.”

She pointed to HMRC’s Making Tax Digital programme as a case in point. “They had a high-level vision, but it wasn’t until they got into the detail that they realised their existing legacy systems couldn’t support the changes. That’s a hard lesson that other departments need to take on board.”

The report suggests that the recent restructuring of digital functions within government, with greater consolidation under the Department for Science, Innovation & Technology (DSIT), could provide an opportunity for much-needed reform. However, Gallagher is cautious about assuming that structural changes alone will solve deep-seated issues.

“It’s still early days, and the new digital centre’s exact shape is still emerging. What’s critical is that the right responsibilities are assigned and that collaboration between DSIT, the Cabinet Office, and other stakeholders is properly managed,” she said.

Strategic supplier management

So what should government do next? Gallagher argues that the first step is recognition: acknowledging that digital transformation is complex and cannot be treated as a simple procurement exercise.

“We need to move away from the idea that transformation is just about spending a few billion and getting IT teams to implement it. The skills gap at the senior leadership level needs to be addressed, digital procurement expertise needs to be developed, and government must take a more strategic, long-term approach to engaging with suppliers,” she said.

The NAO’s recommendations include strengthening strategic supplier management, improving early-stage business planning, and ensuring that digital expertise is embedded at the heart of procurement decision-making. Without these changes, Gallagher warns, the same mistakes will be repeated.

“This isn’t about quick fixes or silver bullets,” she concluded. “Transformation is hard, and government needs to acknowledge this and act accordingly.” The creation of the new digital centre of government provides an excellent opportunity to make the systemic changes that are needed.