Parliamentary committee raises concerns over BBC savings

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The Committee of Public Accounts says it is concerned with "the ease" with which the BBC found more than £50 million in savings to make up losses stemming from late delivery of its Digital Media Initiative.

The programme was designed to transform the way in which BBC staff create, use and share video and audio material by moving production onto a digital platform, including the development of new technology to enable broadcast journalists to manage content efficiently on their desktops.

According to the committee the programme is no longer expected to deliver the overall net financial benefit of £17.9 million which was originally anticipated. Costs are now forecast to reach £133.6 million with benefits of £95.4 million, a net cost of £38.2 million. In the report published today the committee calls on the BBC Trust to demand an explanation for how £26 million of "efficiencies" within BBC Divisions, and a negotiated £24.5 million of new "efficiencies" in the Siemens Framework Contract only came to light when the BBC came under financial pressure.

The Trust should also identify "what lessons can be learned for its other contracts and Divisions", the report added.

The House of Commons

committee also criticised the broadcaster's decision to let its contract for the project to Siemens without it first being tested against other suppliers.

In the end the BBC and Siemens agreed a no-fault termination of the contract in July 2009 and development was taken in-house.

Committee chair MP Margaret Hodge added that it welcomed an assurance by the BBC Trust that it would take a more challenging approach when considering procurements in the future.

In a statement a BBC spokesperson said the broadcaster agrees with the committee that the first phase of the project "did not go according to plan".

"However, the PAC 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 PAC's recommendations for effective oversight of contracts, processes and controls, many of which have already been implemented."

The BBC Trust added that it will consider all the 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."