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Cover of NAO rept: The BBC's management of strategic contracts

The BBC’s management of strategic contracts with the private sector

“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.”

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 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 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 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 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 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.

Media contacts:

Ben Wiseman
Communications Officer, BBC Trust
t: 020 7208 9558
m: 07730 194 019
f: 020 7208 9670

Phil Groves
Press Officer, National Audit Office
t: 020 7798 5339
m: 07770 678477

18 Mar 2009
Cover of The efficiency of radio production at the BBC

The efficiency of radio production at the BBC: review by the Comptroller & Auditor General presented to the BBC Trust’s Finance and Strategy Committee

The NAO review looked at what the BBC is doing to maximise the efficiency of radio production across its Network and Nations radio stations, focusing on the use of cost comparisons for similar programme types within the BBC stations and with commercial competitors, the BBC’s efficiency plans and the BBC’s assessment of the impact of efficiency initiatives on performance.

5 Feb 2009
Report cover showing Royal palace with scaffolding

Maintaining the Occupied Royal Palaces

“For a number of years, the grant given to run and maintain the Royal Palaces has been static – and has fallen significantly in real terms. The Royal Household is making efforts to be more efficient in how it uses its funds, but there is no measure of how effectively the Palaces are being maintained. The Royal Household and Department for Culture, Media and Sport need to develop a way of measuring the condition of the estate over time, so that the Department has confidence that the future of these national assets is secure.”

10 Dec 2008
Report cover showing construction work at a 2010 Olympics site

Preparations for the London 2012 Olympic and Paralympic Games: Progress report June 2008

“The preparations for the Games are well underway. But important challenges remain which will become more formidable as the spotlight turns to London after the Beijing Games. Uncertainties over the deal for the village, legacy requirements and policing and security may add cost or compromise the preparations for a successful Games. The delivery bodies need to maintain a firm stance on cost and keep in sight the intended legacy benefits too.”

20 Jun 2008
Report cover showing man sitting by arts and craft work

Making grants efficiently in the culture, media and sport sector

“Grants awarded in the culture, media and sport sector support a diverse range of programmes, from funding education schemes for children to getting more people involved in sport. Grant-makers do, however, need to get a better handle on the costs and efficiency of their grant making if they are to demonstrate that as much of the money as possible goes into cultural and sporting activities rather than on administrative overheads.”

22 May 2008
Report cover showing a Digital transmitter

Preparations for Digital Switchover

“The Government’s digital switchover programme will affect almost every home in the UK and most of the costs will be met by consumers. Helping consumers through the switchover process requires strong and coordinated working between Government and delivery agencies.

“Progress so far is encouraging, but there is a long way to go with almost one third of licence fee payers still not understanding switchover, up to 26 million analogue television sets yet to be replaced or converted and nearly 1,200 transmitter sites to be upgraded.”

27 Feb 2008
Report cover showing people watching TV

The BBC’s preparedness for digital switchover

The BBC Trust today published an independent review it had commissioned from the National Audit Office (NAO): The BBC’s Preparedness for Digital Switchover which looks in particular at how the BBC plans to meet its obligations set out under the Royal Charter and Agreement.

13 Nov 2007
Report cover showing Olympics site

The budget for the London 2012 Olympic and Paralympic Games

“The Olympic Games is now on a firmer financial footing thanks to the budget announced in March 2007. This should help all those involved in delivering the Games to move forward with greater confidence.

“However a budget is just that – a budget not a target. The Department must still work to contain funding and achieve value for money, and should make clear what will be delivered for the public’s money. There will be a need for clear and quick decision making on funding, effective commercial arrangements with suppliers, and finalisation of designs and legacy plans.”

The report makes recommendations to manage risk in relation to the budget. Those which require immediate action are:

20 Jul 2007