Auditors slam missed broadband target

A GOVERNMENT programme to roll out superfast rural broadband has been criticised by auditors after ministers admitted it would miss its target.

The target to bring superfast broadband to 90% of premises in each area of the UK is now expected to be delivered nearly two years later than initially planned.

Only nine out of 44 local projects are expected to reach their original target of providing 90% superfast coverage by May 2015, said the National Audit Office.

An NAO report forecasts that the programme will complete its rollout 22 months later than planned - in 2017 rather than 2015.

NAO head Amyas Morse said: "The rural broadband project is moving forward late and without the benefit of strong competition to protect public value.

"For this we will have to rely on the department's active use of the controls it has negotiated and strong supervision by Ofcom."

The delay is partly because gaining approval for the project under EU State aid rules took six months longer than expected, said the NAO report on the rural broadband programme.

In June 2013, the government revised its target, and now aims to secure delivery of the rural broadband programme by December 2016, as well as 95% superfast coverage by 2017.

The government designed the programme with three sets of safeguards intended to work together to achieve value for money, recognising that each would not be sufficient alone.

These comprise the promotion of competition through a procurement framework; provision of assurance that bids made by suppliers are appropriate; and in-life contract controls over costs and profit levels.

"Competition has been limited," said the NAO.

"The design of the competitive framework had the advantages of ensuring affordability and transferring risk but, together with State aid conditions and other commercial factors, led to potential suppliers withdrawing from the bidding process.

"BT was left as the only active participant in the framework and is likely to win all 44 local projects."

In addition, the government has secured only limited transparency over the costs in BT's bids.

"It does not have strong assurance that costs, take-up assumptions and the extent of contingency contained in BT's bids are reasonable," the NAO said.

The government had been successful though in securing in-life controls on value for money – such as only paying actual costs supported by invoices and ensuring that suppliers were paid only where they can demonstrate that they have reached key milestones.

But achieving value for money for the programme would in practice depend on scrutiny of hundreds of thousands of invoices and follow-up analysis of take-up rates.

"The success of such a safeguard will partly depend on the level of skill and resource available... during implementation and beyond." said the NAO.

The project funding contributed by BT has so far been lower than originally modelled – the government now expects the company to provide just 23% of the overall projected funding of £1.5 billion, some £207 million less than it modelled in 2011.

At the same time, by the end of the programme, BT is likely to have benefited from £1.2 billion of public money.


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