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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
BBC building

The BBC’s management of three major estate projects

The BBC Trust has today published an independent report prepared by the National Audit Office (NAO) on the BBC’s management of three major estates projects. These were the refurbishment and redevelopment of Broadcasting House in London, the construction of Pacific Quay in Glasgow and the Corporation’s forthcoming move to Salford Quays.

25 Feb 2010

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

The BBC: Collecting the television licence fee

“Television licence fee evasion affects all licence payers. Even on conservative estimates the cost of evasion represents approximately £141 million a year, or £6 for each licence payer, that would otherwise be available to the BBC. The BBC has already done much good work to reduce the evasion rate and continues to take steps to strengthen the collection and enforcement arrangements. My report highlights opportunities to make further progress”.

15 May 2002
City skyline at night

The BBC’s move to Salford

The relocation took place on time and without disruption to broadcasts and should be within budget. But it is too early to judge value for money for licence fee payers.

14 May 2013