BT criticised for non-disclosure agreements in rural broadband contracts

Will Green is news editor of Supply Management
31 March 2014

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1 April 2014 | Will Green

MPs have criticised BT's “insistence on non-disclosure agreements” in contracts to provide broadband to rural areas.

The Public Accounts Select Committee (PAC) said BT had won all 44 contracts with local authorities to provide broadband and the Department for Culture, Media and Sport (DCMS) has “allowed poor cost transparency and lack of detailed broadband rollout plans to create conditions whereby alternative suppliers may be crowded out”.

Margaret Hodge, committee chairman and Labour MP, said: “BT’s monopoly position should have been a red flag for the department. But we see the lack of transparency on costs and BT’s insistence on non-disclosure agreements as symptomatic of BT exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas.”

Under the programme DCMS is providing £490 million in grant funding to 44 local authorities and groups of authorities by 2015 to subsidise them to procure broadband services for their areas. This subsidy is matched by public funding from local authorities and capital investment from BT. DCMS has also committed another £250 million after 2015 to extend the programme to 95 per cent of UK premises by 2017. DCMS has set up a framework delivery contract but when Fujitsu pulled out last year BT was left as the only supplier.

Hodge said: “The department should collect, analyse and publish data on deployment costs in the current programme, to inform its consideration of bids from suppliers under the next round of funding. And before that next round of funding is released, the department should work with local authorities to ensure there is real competition and value for money.

“If we don’t hear that the department is making significant progress on our recommendations we will require a further hearing to find out why it is not improving its approach to protecting public funds.”

BT would not comment on non-disclosure agreements but said DCMS had “full sight” of its costs. “We respect the role of the committee but we feel their criticism of BT is inaccurate and unjustified,” said a spokesman. “BT was the only company willing to accept the challenging terms on offer and make a significant investment in rural areas. This was at a time when others walked away when they realised easy pickings weren’t to be had. Claims that BT is a monopoly are simply inaccurate given more than 100 ISPs are offering fibre across BT’s open network.”

Communications Minister Ed Vaizey said: “As we approach the milestone of connecting 500,000 homes under our programme, and overtake Germany in terms of broadband connectivity, people would be forgiven for thinking this latest salvo has missed the point. Britain has the best superfast broadband of all five leading European economies; our nationwide broadband rollout is ahead of schedule; multiple robust safeguards are already in place to ensure value for money, and thousands of homes and businesses up and down the country are already getting the benefits.”

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