DCMS 'failed to deliver competition' in rural broadband contracts

26 September 2013

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27 September 2013 | Will Green

MPs have criticised the handling of contracts around the government-backed rollout of broadband to rural areas. 

The Public Accounts Committee (PAC) said BT had been put in a “quasi-monopolistic position” as the sole provider and the Department for Culture, Media and Sport's (DCMS) “approach to procurement failed to deliver any meaningful competition to drive down prices and maximise coverage”.

In The rural broadband programme the PAC said the 26 contracts let by local authorities so far to provide broadband had gone to BT and the firm was “likely to win the remaining 18”.

Originally there were two suppliers in the DCMS’s framework until Fujitsu pulled out in March, leaving only BT. 

The report said: “The department accepted contract terms that were overly generous to BT and do not promote value for money, such as confidentiality clauses over bid costs and roll-out plans. The department also failed to negotiate the full access it needed to BT’s cost information to validate that bids from BT for local projects were reasonably priced; a key control over value for money on a programme where there is no competitive tension in individual procurements.

“Local authorities are contributing over £230 million more to the programme than the department assumed in its 2011 business case, and BT over £200 million less, yet BT will ultimately benefit from £1.2 billion of public funding.”

A DCMS spokesman said: “We put in place a fair commercial process and encouraged different suppliers to bid. We are disappointed that the PAC fails to recognise that thousands of rural premises who have never had a decent broadband supply are now getting one, something that is vital for farmers, rural businesses and all those who live outside major cities.”

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