The BBC has set up a technology partnership board chaired by its director-general to beef up management of its £2bn IT outsourcing contract with Siemens.
The move follows a damning report by MPs in June, which found that 60% of the key technology projects in the deal's first year suffered delays or went over budget.
The report by the Commons public accounts committee found that the BBC had been “slow to introduce effective management” of the 10-year contract signed in October 2004, which saw Siemens take over the broadcaster’s IT subsidiary, BBC Technology, with 1,400 staff.
The BBC “did not put in place adequate arrangements to check the accuracy of invoices received, validate claimed performance levels or engage its senior management in driving the contract”, the MPs said.
The BBC Trust, which oversees the corporation, has accepted the MPs’ conclusion in its formal response to the report. “Whilst the BBC and Siemens both agree that the partnership has worked well to date, both parties also accepted at the time the report was published that a more active engagement of board-level executives was necessary to underline the importance of the partnership and align strategic objectives,” it says.
As a result, the BBC has now set up its technology partnership board, which is chaired by director-general Mark Thompson and also includes the BBC’s group finance director, the new media director and Siemens’ executive director.
The new governance arrangements were designed to ensure lessons were learned to improve project management, the BBC Trust said.
Its response also acknowledges that the £22m savings made so far through the Siemens contract were “not fully in line” with the figures reported to BBC governors in September 2004 – just before the massive outsourcing contract was signed. “The term ‘guaranteed savings’, in the original submission to the board was inexact,” the BBC Trust admitted.
But the Trust challenged the MPs’ finding that the annual savings from the deal had “fluctuated widely” from £21.8m to £40m. Its response says: “£21.8m was not an estimate of annual savings for the term of the contract; it was the estimated savings for the first year of the contract only. The increase in the estimated annual savings going forward to £40m (from the initial forecast of £27.5m) is due to the BBC identifying additional ways that the contract can and is delivering savings.”
Describing this as “a positive reforecast”, it adds: “The contract is highly complex and some of the implicit savings were omitted from the original savings projections. “
Earlier this year, BBC IT staff outsourced to Siemens were among those who secured 4% pay rises after threatening strike action.