Press Release - BBC Trust publishes NAO report on the
BBC's Management of Strategic Contracts with the Private
Sector
18 March 2009
The BBC Trust today (18 March 2009) published an independent report
it had commissioned from the National Audit Office on the BBC’s
management of its strategic contracts with the private
sector.
Jeremy Peat, BBC Trustee, said:
"The Trust welcomes this report from the NAO
into the BBC’s strategic contracts. We are pleased that the NAO
found that the BBC has exceeded its own savings targets for these
contracts. However, we recognise that there is more to be done to
ensure consistency in the way the BBC manages large contracts. The
BBC Executive has now set out its response to the NAO’s
recommendations. The Trust has required the Executive to provide an
action plan and timetable for this response to be implemented."
Tim Burr, Comptroller and Auditor General,
said:
"The BBC has kept its spending on strategic
contracts in line with its forecasts and exceeded its savings
targets. It now needs to concentrate on securing the levels of
service for which it has paid - as well as achieving greater
innovation - to provide the BBC and licence fee payers with value
for money."
Management of strategic contracts
The NAO review looked at whether the BBC is
securing the service and financial objectives the Corporation
outlined when it entered into high value, individual strategic
contracts and whether adequate steps have been taken to maximise
the value for money of its portfolio of strategic contracts.
The report found that the BBC spent £715
million on strategic contracts in 2007-08, in line with forecasts,
and exceeded its savings target of £135 million by £22 million. The
BBC has secured the contractually agreed minimum levels of service
for 91 per cent of the indicators specified when it entered its
strategic contracts where those indicators are linked to payment
and 82 per cent of performance indicators not linked to payment.
However, the BBC has not secured as much innovation by the
contractors as it expected on some contracts. The BBC has not,
therefore, achieved the full range or level of performance
specified in its strategic contracts.
Overall, across five contracts examined, the
BBC’s approach to relationship management was above average
compared to other organisations in the public and private sectors.
Although the BBC has examples of good practice in contract
management its contract and relationship management with its
private sector suppliers is variable. The Corporation needs
consistently to follow best practice.
The report has identified a series of
recommendations to improve the management of strategic contracts at
the BBC.
- The NAO recommends that, to improve the
service and innovation the BBC receives through its strategic
contracts, it should identify the source of shortfalls in contract
performance, prepare action plans with targets and apply lessons
learned when procuring strategic contracts in future.
The Trust welcomes the work that the NAO has done on identifying
ways in which the BBC Executive can improve its contact management.
The Trust notes that the report acknowledges the formation of the
BBC’s Strategic Relationships Board, which will share issues, best
practice and become a focal point for reporting. The Trust also
expects the BBC Executive to undertake a more robust annual review
of contracts and introduce greater senior management involvement in
underperforming contracts. The Trust has asked the Executive to
prepare an action plan and timetable and report back progress.
- The NAO recommends that to improve the
consistency of its contract management the BBC should define core
competencies for contract managers, identify the relationship
management needs of contracts and clarify accountability for
contract managers.
The Trust supports the BBC Executive’s progress in developing the
expertise of its contract managers and the development of a set of
core competencies for contract management. The Trust also supports
the BBC Executive’s plans to develop a structured approach to the
professional development of contract managers.
- The NAO recommends that to make the most of
open-book access rights to suppliers’ records the BBC should
exercise those rights.
The Trust notes that the BBC Executive has completed an audit with
JCI and currently has audits with Siemens and Capita TVL in
progress. Additionally the BBC Executive routinely interrogates
data from contracts suppliers and has arrangements to see annual
cost data. The Trust supports open book audits whenever
appropriate.
- The NAO recommends that to identify the
relative importance of services to its business the BBC should
establish criteria to identify the most important performance
indicators.
The Trust welcomes the BBC Executive’s undertaking that the
Strategic Relationships Board will undertake a review of all the
performance measures across the BBC’s portfolio of contracts.
- The NAO recommends that the BBC should
validate performance information provided by suppliers,
particularly when the reported information has a bearing on
payments to the supplier.
The Trust notes that, although the BBC Executive has methods of
ensuring performance across the portfolio of contracts, performance
is not systematically validated against all performance indicators
as a matter of routine. The Trust welcomes the Executive’s
undertaking to introduce a process of sample validation across the
key contracts.
Notes for Editors
- It is the responsibility of the BBC Trust,
under the Royal Charter, to ensure that value for money is achieved
by the BBC through its spending of the licence fee. In order to
fulfil this responsibility, the Trust commissions and publishes a
series of independent value for money reviews each year in
consultation with the Comptroller and Auditor General – the head of
the NAO. The reviews are undertaken by the NAO or other external
agencies.
- The BBC defines ‘strategic contracts’ as
those which have an annual cost of at least £2 million and a term
of at least five years. In 2007-08 the BBC had 17 strategic
contracts. Services received under strategic contracts include:
technology (Siemens), digital terrestrial television transmission
(Arqiva), human resources (Capita) and facilities management
(Johnson Controls Limited and HBML Limited). During 2007-08 the BBC
signed two further strategic contracts, with Eaga and RMS but
incurred no expenditure on those contracts in 2007-08.
- Press notices and reports are available from
the date of publication on the NAO website, which is at
www.nao.org.uk or the BBC Trust’s website:
www.bbc.co.uk/bbctrust. Hard copies can be obtained from The
Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Tim
Burr, is the head of the National Audit Office which employs some
850 staff. He and the NAO are totally independent of
Government. He certifies the accounts of all Government
departments and a wide range of other public sector bodies; and he
has statutory authority to report to Parliament on the economy,
efficiency and effectiveness with which departments and other
bodies have used their resources.
Media contacts:
Ben Wiseman
Communications Officer, BBC Trust
t: 020 7208 9558
m: 07930 393475
f: 020 7208 9670
Phil Groves
Press Officer, National Audit Office
t: 020 7798 5339
m: 07770 678477