UK public sector AI contracts reach £5 billion

UK public sector buyers awarded 2,129 AI contracts worth £5 billion between 01/01/2018 and the 03/08/2026, according to Tussell’s monthly procurement tracker. 2026 is already the biggest year on record by contract value, with £1.41 billion (453 contracts) awarded so far, ahead of £1.18 billion (521 contracts) in 2025.

A £456 million Cabinet Office contract awarded to KPMG and EY for a new National School of Government and Public Service helped lift the latest total. The deal includes civil service training across digital and AI, and contributed to a sharp narrowing of the supplier gap: US-based firms have won £2.28 billion in AI-related contracts since 2018, compared with just under £2.19 billion for UK-based suppliers.

The largest buyers by awarded value include the Met Office, the Ministry of Defence, the Department for Science, Innovation & Technology, the Cabinet Office and NHS England. Microsoft leads suppliers with £1.03 billion, followed by Palantir, KPMG, Hochtief and Laboratory of the Government Chemist. Despite rapid growth, AI remains a small slice of public technology spending, accounting for roughly 4% of the total value of IT Services and Software contracts over the Jan 2018 – Jan 2026 period.