BBC focuses on making procurement more effective

14 May 2012

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14 May 2012 | Paul Snell

The BBC is focusing on making its procurement function more effective, rather than reducing its cost according to the National Audit Office (NAO).

A report, The BBC's approach to managing the cost of its support functions, said the cost of the function had fallen was £5.2 million. This was the same as in 2006-2007, but a reduction compared to the £6.1 million it cost in 2010-2011.

Although the cost has remained relatively stable over the past five years, the NAO said when rated against external benchmarks for other functions in the public sector it is among the highest performers – the only department at the corporation evaluated to achieve this. The BBC told the NAO it would continue to benchmark to maintain current performance levels.

“By increasing its spending on staff involved with contract negotiation and management, the BBC intends its procurement activities will generate savings,” said the report.

In its analysis of the broadcaster, the NAO said it had cut or kept the same the cost of eight support functions when adjusted for inflation. “To be certain that it is achieving the best possible value for money for the licence payer, the BBC needs to be consistent and rigorous in defining the service it requires from its support functions; identify what that service should cost; and adjust its costs accordingly,” said head of the NAO Amyas Morse.

All functions saw a fall in cost, with the exception of procurement that was the same, and BBC Workplace – which manages the group’s property portfolio – where costs increased by 39 per cent. This was attributed to the Corporation’s transfer of some operations to Salford, acquisition of new buildings and subsequent reorganisation of the estate.

The BBC has to find 25 per cent savings from its support functions by 2016-17. The NAO has recommended the public broadcaster establish how much support services cost to deliver, rather than assessing the impact of cuts to operate within cost constraints. It also recommended a more consistent approach to challenging costs and the development of an organisational plan for benchmarking.

"The NAO has recognised the significant reductions in costs we have made in our support services since 2006 and improvements in the management of major contracts and benchmarking," said a BBC spokeswoman. "We are continuing these good practices as we work to achieve the 25 per cent savings to be met by 2016/17, as set out in our Delivering Quality First proposals.”

“We’re pleased the NAO has judged the BBC to be broadly effective in improving value for money, given the success it has had in cutting its support costs in the past five years,” said BBC trustee Anthony Fry, who is responsible for value for money, in a statement. “We accept that there are improvements to be made to understand exactly what each support function should cost and to make future cost savings in a more co-ordinated and consistent fashion.”

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