MPs criticise BBC IT project

8th April 2011

The BBC should take a move "vigilant approach" to value for money, according to a group of MPs.

The Commons public accounts committee found the BBC's Digital Media Initiative should not have been allowed without open competition.

In its report, released on Thursday, the group of MPs found the BBC compensated by finding efficiencies of more than £50m.

However, it raised concerns about the "ease" with which the broadcaster found the savings to cover the costs.

The DMI project is a programme intended to allow BBC staff to make and share TV and radio programmes on their computers, without the need for old-fashioned video and audio tapes.

Expected to cost £81.6m, it is projected to deliver benefits of £99.6m by March 2015.

It was contracted out to Siemens, the BBC's principal technology supplier.

Following the termination of the Siemens contract, the BBC took the project in-house and lost £26m in benefits and led to a two-year delay.

And despite the range of failures, the BBC is set to complete the initiative by mid 2011 and within a revised budget of £133.6m.

Committee chair Margaret Hodge said the corporation had made good progress in delivering its digital media initiative in-house following the termination of its contract with Siemens.

"With hindsight, the BBC should not have let the contract for its digital media initiative to Siemens without testing the contractor against other suppliers, especially as there was a high degree of innovation involved," she said.

"We welcome the Trust's assurance that it would not take a more challenging approach when considering procurements.

"We are concerned with the ease with which the BBC found over £50m in savings to make up for the losses it suffered through late delivery of the project and its own increased delivery costs. This suggests the need for a more vigilant approach to value for money."

The report followed a National Audit Office report in February that found the BBC's approach had been "disappointing and did not achieve value for money".

However, it did find the delivery of the system had progressed well since taking it back in house, with positive user response.

A BBC Trust spokeswoman said: "We will consider all the committee's recommendations very carefully.

"The Trust has set a very clear and challenging efficiency target for the BBC as a whole, which it monitors year on year.

"In addition, this year we have commissioned the National Audit Office specifically to carry out a study on the progress made by the BBC against its five-year efficiency programme."

A BBC spokesman said: "DMI is a cutting-edge technology project which will carry long-term creative and financial benefits and transform the way we make content in the future.

"The BBC agrees with the NAO that the first phase of the project did not go according to plan. However, the NAO report shows the project is now progressing well, having been brought under BBC management after a rigorous financial assessment, and is already being successfully implemented into the business.

"Importantly, costs arising from delays to the project have not been borne by the licence fee-payer.

"We fully agree with the NAO's recommendations for effective oversight of contracts, processes and controls, many of which have already been implemented."

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