The BBC was wrong to appoint Siemens without any contract competition on a specialist technology transformation programme, the National Audit Office has concluded.
Siemens, an existing contractor to the BBC for IT and programme transmission, was in 2007 appointed as service provider for the Digital Media Initiative, which is aimed at allowing the broadcaster’s staff to develop, create, share and manage video and audio content on their desktops. It combines software, hardware and networking.
“The way in which the BBC appointed the contractor without a new competition, and was then unable to intervene effectively in system development without undermining its transfer of financial risk to the contractor, was not an effective way of approaching the delivery of a complex programme,” said the NAO report, released publicly by the BBC Trust today.
While the work was awarded under an existing framework with Siemens for IT outsourcing, it did not lead to the planned outcomes and ran behind schedule.
The BBC ended up bringing the work back in house in 2009 because it was concerned about the problems. It reached a £27.5 million settlement with Siemens, using the money towards completing the scheme.
The report criticised the BBC for failing to test whether bringing back IT in house was the “best option” financially or for the future operation of the programme.
The BBC should have applied “greater rigour” when it drew up the contract, the report noted. The scheme has run at a net cost of £10.7 million so far, instead of a projected net benefit of £17.9 million. The project will continue until 2017, as forecast.
“The BBC’s approach to the early stages of this programme was disappointing and did not achieve value for money,” said Amyas Morse, head of the National Audit Office. “The real test of value for money of the programme as a whole will be the take-up by users across the BBC and elsewhere, and on this it is too early to conclude.”
The BBC Trust said it acknowledged the problems on the early phases of the project, when run by Siemens. But it added that the broadcaster had “reacted with speed and efficiency” to tackle the issues.