Conclusions and recommendations |
1. The BBC's contract with Siemens failed
and was terminated by mutual agreement and the BBC is now delivering
the Programme in house.
The contractor did not deliver against the key contract milestones
and the contract was terminated as part of a no-fault settlement.
There are still risks to be managed, but the BBC has made good
progress in delivering the technology necessary to support the
2. By letting the contract without competition
the BBC did not test the capability and relative strengths of
prospective suppliers. The Trust acknowledged that it would now
be more sceptical about such an approach.
Whilst we accept that we are judging this with the benefit of
hindsight, testing the capacity and capability of suppliers was
particularly important in this case as there was a high degree
of innovation involved. The BBC therefore would have done better
to test Siemens against alternative suppliers. We welcome the
Trust's assurance that it would now take a more challenging approach
when considering procurements. In doing so, the Trust should take
into account the level of innovation sought, the delivery risks,
and the need to understand the contractor's capacity and capability.
3. The BBC transferred too much financial
risk to the contractor, Siemens, given the level of technological
innovation involved. This approach meant that that BBC did not
have a good enough understanding of the contractor's design and
development work, and was unable to intervene effectively even
when it knew delivery was at risk. This resulted in a two year
delay in securing the technology for the Programme.
We welcome the BBC's commitment to consider more carefully the
appropriate degree of risk transfer for future contracts. It should
have a close understanding of the design and development approach
being taken by a contractor and should retain the ability to intervene
without waiting for non-delivery or contract termination.
4. While the BBC expects financial benefits
from the Programme, it also expects non-financial benefits. These
benefits include transforming the way the BBC makes programmes
and supporting the forthcoming move to Salford.
The BBC gave more attention to the non-financial case later in
the life of the Programme, and should do so from the outset in
considering future investment cases.
5. The fact that the BBC easily identified
new savings to compensate for the financial consequences of the
contract failing suggests that the BBC should be more vigilant
in securing real value and efficiency.
The BBC was able to find £26 million in efficiencies to make
up for the losses it bore through the late delivery of the Programme.
It identified a further £24.5 million in new efficiencies
in its wider Technology Framework Contract to cover the additional
costs of completing the Programme in-house. The BBC Trust should
obtain an explanation of why these efficiencies only came to light
when the BBC came under financial pressure, and should identify
what lessons can be learned for its other contracts and Divisions.
6. So far the BBC has made good progress in
delivering the Programme in-house. Since
taking the Programme in-house, the BBC has successfully delivered
four technology releases and is currently on course to deliver
the complete technology for the Programme by Summer 2011, although
this is five months later than planned. The BBC attributes its
success to date to a strong supplier management team and to the
creation of an in-house software development team. The Office
of Government Commerce should work with the BBC to identify practical
lessons to be shared across the wider public sector.
7. The BBC's confidential settlement with
the contractor delayed the C&AG's access to relevant information,
and led to the National Audit Office's review being held up for
eight months. We are pleased that the
Trust agrees that there should be speedy access to all the information
that is required when the C&AG decides to do a study. The
C&AG should have full and unfettered access to the information
he considers necessary and discretion over what is published.
8. We welcome the Trust's constructive approach
to giving evidence and its willingness to acknowledge the mistakes
of the past. The Trust acknowledged our
concerns about the need to provide more robust challenge before
engaging in non-competitive procurements. We share the Trust's
interest in pursuing value for money for the licence fee payer
and look forward to the Trust having a similarly open approach
with us in the future.