The Department faces a particularly high risk of fraud in its procurement, but there is little evidence that its work to select and oversee contractors deters or penalises dishonest behaviour. Procurement makes up most of the Department’s estimated £1.5 billion exposure to fraud and most of the value of the fraud allegations it receives. The Department recognises that it faces serious risks of commercial fraud and that it needs to watch for what it describes as sharp commercial practice. In 2024–25, the Department stopped around £400 million of contract payments that it judged to be invalid. Suppliers had submitted these claims even though open-book arrangements give the Department access to their financial data. This, together with the Department’s lack of clarity about when it should refer commercial disputes to the police or counter-fraud teams, suggests that suppliers may regularly and repeatedly claim more than they are entitled to. It also suggests that the Department does not do enough to deter this behaviour. A 2024 exercise to identify ‘commercial leakage’ found £17.5 million of potential overpayments in digital procurement. The Department has not extended this type of exercise across the rest of its procurement activity, limiting its ability to protect public money and take action against possible fraud. We are also concerned about whether the Department’s response to commercial threats, including the risks created when staff move between the Department and its suppliers, is strong enough to deter future fraud. recommendation The Department should work with the Public Sector Fraud Authority to develop a playbook for how it will apply its counter-fraud capabilities within its commercial activities. This should set out how it will investigate and take criminal or service justice action to deter malicious actors including suppliers, individuals or collusive networks, who may abuse contract arrangements, payment processes, or conflicts of interest for personal