The promise of digital transformation has never been more urgent, nor the consequences of getting it wrong more visible. In January 2025, the National Audit Office published one of the most damning assessments of public-sector technology procurement in a generation. Across five major digital programmes, cumulative costs had increased by more than £3 billion; the delays represented, in the NAO’s own reckoning, at least 29 years of lost modernisation. The proximate cause was not a shortage of ambition, nor even of budget. It was a structural failure in how digital delivery is procured, governed, and managed.
The NAO’s findings are a public-sector headline, but the patterns they describe, requirements defined too early, technical risk downplayed, contracts awarded before the true problem is understood, are entirely familiar to anyone who has worked in enterprise digital programmes in regulated industries. This is not a government problem. It is a procurement problem, and it is systemic.
Why Conventional Procurement Models Break Down for Digital
The way most organisations procure technology is inherited from a world in which requirements could be defined comprehensively at the outset, output could be specified precisely, and delivery risk could be transferred contractually to a supplier. That model works reasonably well for procuring physical goods or commodity services. It works poorly for digital transformation, and it is beginning to fail even experienced procurement teams under pressure to modernise at speed.
The evidence is compelling. McKinsey and BCG research consistently finds that 70 per cent of digital transformation initiatives fail to meet their objectives; Bain’s 2024 analysis places the figure higher still, with 88 per cent of business transformations failing to achieve their original ambitions. These are not statistical anomalies. They reflect a genuine mismatch between the assumptions embedded in traditional procurement and the conditions under which digital programmes actually operate.
The core tension is this: procurement frameworks are designed to reduce ambiguity and assign accountability before work begins. Digital delivery requires the opposite, the ability to refine requirements iteratively, respond to what is discovered in delivery, and adjust scope as organisational context changes. When a fixed-price contract is signed against a specification that will inevitably evolve, the result is either a scope dispute, a costly change-control process, or a delivered system that meets the letter of the specification but misses the point of the programme.
A further complication is the asymmetry of technical knowledge between buyer and supplier. As the NAO noted explicitly in its January 2025 report, departments frequently enter contracts without adequately understanding the existing technical environment; complexities that emerge after contracts are signed can be too fundamental to address through change control. This is not a failure of due diligence alone. It is a structural consequence of separating commercial decision-making from technical insight at the point of procurement.
The Procurement Act 2023: New Rules, Same Risks
The Procurement Act 2023, which came into force on 24 February 2025, introduces meaningful changes for public sector buyers: greater flexibility in procurement procedures, clearer provisions for pre-market engagement, stronger transparency requirements, and mechanisms better suited to complex technology contracts. Its Competitive Flexible Procedure, in particular, allows for structured dialogue and negotiation with suppliers, a significant departure from the rigid evaluation processes that have historically made it difficult to develop a shared understanding before contract award.
These are genuine improvements. But legislative change does not automatically translate into better outcomes if the underlying capability gap is not addressed. The Public Accounts Committee’s June 2025 report identified that of the roughly 6,000 employees working in the government’s commercial procurement function, only 15 were dedicated full-time to managing major technology suppliers, this against an annual digital procurement spend of at least £14 billion. Reforming the rules matters. Reforming how those rules are applied, by people with sufficient digital and commercial capability, matters more.
For organisations in the private and regulated sectors, the lesson is structurally identical. Procurement reform without investment in the capability to apply it produces compliance theatre rather than better outcomes.
What Procurement-Friendly Digital Delivery Actually Looks Like
The phrase “procurement-friendly” is sometimes used as a euphemism for making digital delivery palatable to a process that was never designed for it. That is not what we mean here. Procurement-friendly digital delivery means structuring programmes in ways that are genuinely compatible with sound commercial governance,maintaining appropriate controls, ensuring accountability, enabling audit,while removing the features of conventional procurement that create risk rather than reduce it.
There are four structural principles that underpin this approach.
Start with outcomes, not specifications. The most reliable predictor of procurement failure in digital programmes is a contract built around a detailed functional specification produced before any meaningful discovery work has been done. Outcome-based contracting, agreeing on what good looks like in measurable terms, rather than prescribing how a system must be built, shifts the conversation from compliance to value. It also enables the supplier to bring genuine expertise to the solution’s design, rather than simply executing against a blueprint that may already be wrong.
Design for modularity. Monolithic digital programmes, large, multi-year contracts covering the full scope of a transformation, are the single greatest source of risk in technology procurement. They concentrate dependencies, reduce competition at renewal, and make it structurally difficult to learn and adapt during delivery. Modular contracting, as recommended explicitly in emerging government procurement guidance, disaggregates delivery into components that can be independently contracted, independently assessed, and independently replaced. It also creates natural decision points, gates at which a programme can be reoriented or stopped before failure becomes entrenched.
Invest in pre-market engagement. The Procurement Act 2023’s provisions for pre-market engagement are not window dressing. They reflect a well-evidenced principle: that procurement processes which begin with a shared understanding of the problem, the technical environment, and the landscape of available solutions produce significantly better outcomes than those which treat supplier engagement as a compliance risk to be managed. Pre-market engagement should be systematic, documented, and genuinely inform the commercial structure of the procurement, not simply provide the appearance of market-testing.
Separate the technical evaluation from the commercial evaluation. One of the most common failure modes in digital procurement, documented extensively by the NAO, is the treatment of technical risk as a subset of commercial risk, evaluated by the same people using the same frameworks. Technical feasibility assessment requires different expertise. Programmes that integrate technical evaluation at the business case stage, before procurement begins, avoid the situation in which complexity that is visible to an experienced practitioner is invisible to a generalist commercial team reviewing a bid.
The Role of Senior-Level Capability in Reducing Delivery Risk
None of the structural changes above reduces procurement risk if the people applying them lack the experience to do so. This is a capability question as much as a process question.
The UK government’s own Digital Sourcing Strategy, in development through 2025, reflects a growing acknowledgement that the buy-versus-build binary that historically framed digital procurement decisions has become inadequate. As the Government’s CTO noted in March 2025, the choice is now “buy, build, partner, procure, innovate”, a far more complex set of options requiring genuinely senior technical and commercial judgement to navigate well.
For mid-market organisations and funded scaleups, the equivalent challenge is the absence of the in-house capability that large enterprises can draw on. The CTO or technology director who can hold a commercial conversation with a systems integrator while simultaneously evaluating technical architecture and delivery risk is not someone who can be recruited easily and is often not needed on a permanent basis. This is precisely where fractional senior-level capability, structured engagement with experienced practitioners at critical points in a programme, delivers disproportionate value relative to cost.
The decision of how to structure a digital programme is not a procurement decision. It is a technical and strategic decision that happens to have procurement consequences. Making it well requires people who understand both the technology and the commercial environment in which the programme is operating.
A Practical Framework for Lower-Risk Digital Procurement
For technology and programme leaders about to enter a procurement process for a significant digital initiative, the following sequence reduces risk without compromising governance:
Define measurable outcomes before drafting requirements. What does success look like in 12 months? In 24? Ensure those outcomes are specific enough to be evaluated and agreed upon by both parties.
Conduct structured discovery before procurement. A short, time-boxed discovery phase, even at modest cost, that maps the existing technical environment, identifies integration dependencies, and tests assumptions about scope will prevent much larger downstream cost overruns.
Engage the market early and document it properly. Pre-market engagement, conducted in compliance with the Procurement Act 2023 framework, surfaces information on the feasibility and cost of different delivery approaches that cannot be inferred from desk research alone.
Structure contracts for modularity and iteration. Define clear phases with gate reviews. Preserve the right to adjust scope between phases. Avoid locking delivery approach into the contract in ways that prevent adaptation as the programme evolves.
Maintain technical oversight throughout delivery. The intelligent client function,the capability to evaluate what is being delivered, identify risk early, and hold suppliers accountable at a technical level, is the single most important factor in whether a programme recovers from the difficulties that are inevitable in any complex digital programme.
The Commercial Imperative
The NAO’s January 2025 findings, the PAC’s June 2025 report, and the broader evidence on digital programme failure rates all point in the same direction: the problem is not that digital transformation is inherently difficult to procure, but that it is routinely procured using frameworks designed for a different category of spend.
Fixing this does not require a revolution in procurement practice. It requires bringing together technical and commercial capability at the point where programmes are designed and structured, before the contract is signed, before the specification is fixed, before the delivery risk is locked in.
For organisations that get this right, the advantage is significant. Digital programmes that are structured for procurement compatibility, modular, outcome-based, and technically grounded do not merely survive governance scrutiny. They deliver faster, course-correct more cheaply when problems arise, and produce outcomes that organisations can actually use.
At Flipware Technologies, we work with programme and technology leaders in regulated industries and funded scaleups to design digital programmes that are built to deliver, commercially sound, technically credible, and structured to succeed through procurement rather than despite it. If you are at the early stage of a digital programme and want senior-level input before the procurement process begins, we would be glad to talk.
References
- The Register, UK government tech procurement lacks understanding, says watchdog (January 2025): https://www.theregister.com/2025/01/16/nao_uk_government_tech
- Heimdall Partner, Digital Transformation Failure Rate: Why Most Projects Fall Short: https://heimdallpartner.com/insights/digital-transformation/digital-transformation-failure-rate/
- GOV.UK, Transforming Public Procurement: Procurement Act 2023: https://www.gov.uk/government/collections/transforming-public-procurement
- CPO strategy, New report calls for “step change” in UK Government digital procurement (June 2025): https://cpostrategy.media/blog/2025/06/09/new-report-calls-for-step-change-in-uk-government-digital-procurement/
- Procurement Magazine, UK Government Pioneers Strategic Method to Digital Sourcing (March 2025): https://procurementmag.com/procurement-strategy/uk-government-develop-digital-sourcing-strategy
- Agile36, Agile in Government 2026: Digital Transformation Beyond Compliance: https://www.agile36.com/blog/agile-in-government-2026
Flipware Technologies is a UK-based digital transformation and data consultancy with offices in Glasgow and London. From FTSE 100 data programmes to funded startup platforms, we bring senior-level technology and data leadership to organisations that need outcomes, not just delivery.
