The UK public sector awarded £1.17 billion in artificial intelligence contracts in 2025, more than doubling the previous year’s spend and marking the biggest single year for government AI procurement on record.
The figures, drawn from public contract data, represent a 102% increase on 2024 – a surge that signals AI has moved firmly from pilot projects into mainstream government procurement. Across health, defence, education, and central government, public bodies are now committing significant budgets to AI-driven tools and services.
The milestone reflects a broader trend of accelerating technology investment across the public sector, which now spends an estimated £16.6 billion per year directly with technology suppliers, making it one of the largest and most stable markets for tech and digital consultancy firms in the UK.
Defence and education lead the way
While AI adoption is spreading across government, defence and education are seeing the most significant growth in overall IT spending. Defence contracts are being driven by demands for data analytics, cybersecurity, and intelligence capabilities, while the education sector is investing heavily in digital connectivity and infrastructure.
The education sector’s growing appetite for AI tools was underlined in February 2026 when the University of Kent became the first public sector body to award a contract directly to OpenAI, the company behind the ChatGPT platform. The agreement marks a significant moment for the industry: prominent AI firms are now active participants in the UK public sector supply chain, not merely aspiring ones.
From experimentation to procurement
For technology suppliers, the data confirms what many have seen on the ground: government buyers are moving beyond tentative experimentation. Budget holders who once requested small pilots are now commissioning multi-year contracts with defined deliverables. Procurement teams are developing more sophisticated evaluation criteria for AI products, and frameworks such as G-Cloud and TS4 offer routes to market for AI solutions.
The shift also brings new scrutiny. The Procurement Act 2023, now fully in force, demands greater transparency and rigour from both buyers and suppliers. AI contracts are no exception – public bodies are under pressure to document how AI tools are assessed for bias, accuracy, and data security before procurement decisions are made.
Opportunities for suppliers
For technology and consultancy firms targeting the public sector, the figures present a compelling opportunity – but also a competitive one. The Tussell Tech200 – which ranks the 200 fastest-growing government tech suppliers by revenue growth – contains numerous SMEs, with 56% of this year’s list being small or medium-sized businesses.
US-headquartered companies, including OpenAI, are showing the strongest revenue growth in the government market. However, nearly 70% of the fastest-growing tech suppliers are UK-based, suggesting that domestic firms still hold a structural advantage in navigating public sector procurement processes, building trusted relationships, and meeting requirements around data residency and national security.
What comes next
With the UK government’s annual spending review having allocated £86 billion for science and technology investment, the pipeline for AI and digital contracts is expected to remain strong through 2026 and beyond. Central government departments, NHS bodies, and local authorities are all at different stages of AI adoption, meaning the market is still growing rapidly.
For suppliers, the message is clear: government appetite for AI is no longer a question. The race now is to demonstrate value and build credibility within the public sector. Bramble Hub is a supplier on several tech-related frameworks, providing buyers a broad selection of trusted partners via a range of frameworks.
Bramble Hub works with a number of AI-specialist partners and can supply services via a selection of frameworks including G-Cloud and Technology Services 4.
