A good news story for public procurement and the BBC (yes, really!)

With all the gloomy stories about public sector procurement, and the troubles at the BBC, let’s celebrate a real public sector (sort of) procurement success story with a BBC angle – the switch to Digital TV.  Here’s digital spy:

“Britain has today (October 24) bid farewell to more than 70 years of analogue television, after the final stage of the £630 million digital switchover project was completed in Northern Ireland”.

You didn’t really notice, did you? All went very smoothly?

Well, if you go back to 2007, that wasn’t the prognosis. There were regular press stories about how it was all going to be a disaster – in particular, how the old, infirm or marginalised would find themselves without TV post switchover, sitting helplessly in front of their blank analogues screens. This was typical Daily Mail stuff from late 2007.

The elderly are in danger of being left in the dark about the switch to digital TV. Those who need help most are not getting information and technical support, says a report for regulator Ofcom”.

So the BBC and Digital UK put in place the Digital Switchover Help Scheme, delivered via a third party contract, to provide support to those who needed it – “vulnerable people” in some sense - in terms of helping them make the change. (I’ll declare an interest here, as I had some limited governance-level involvement with the procurement process in the early days).

It was a fascinating service requirement and therefore procurement. The services included call centre, various communications approaches, staff to actually go into homes and install aerials, financial management... a very complex service, with all sorts of sensitivities (how do you deal with and explain options to an elderly, disabled lady living alone who doesn’t speak English)?

An added complication was the need to run a pilot, for which a contract had to be let quickly, without prejudicing the market for the main tender. Capita duly won the competition for the pilot, to no-one’s surprise, but then lost out to Eaga (since acquired by Carillion) in the main tender, which was a surprise – but also a demonstration of a skilful procurement process which managed to maintain real competition right up to the final decision.

The risk transfer issues were also challenging. No-one knew quite how much work would be needed. So how much risk should the supplier hold? A complete fixed price deal would have been possible, but it was decided that the BBC was better placed to manage most of the volume risk – however, a lot of operational risk was transferred to the provider.

So, several years on, what was the outcome?

Well, the switchover is complete. I have not found one single press report of “old folks left with no TV”. Or, “workmen who claimed to be installing an aerial for me trashed my house and stole my life savings”.  Or “my new TV exploded after rogue workmen installed a new aerial”. These were typical concerns back in the early days of the scheme.

And the decisions on risk transfer were totally vindicated. It’s actually a good story– the experience showed that more people than estimated were either capable of doing things themselves, or had friends and family who would rally round and help. So usage of the scheme was well below plan, and the total cost has come in at £260M against the budget of £603M - £340M has been returned to the government.

From my limited role early on, I can honestly say the BBC procurement and project team involved was first class, and the top people at the BBC extremely impressive. When George Entwistle got the top job in the BBC recently, I thought “good gracious, he must be good if he’s beaten Caroline Thomson to it”, because she (the COO then) and Zarin Patel (the CFO) were two of the most impressive people I’ve met in my business career.

So it’s good to see a very satisfactory outcome, and a shame that good news doesn’t get as much attention as bad.

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Voices (2)

  1. Chris C:

    http://newrytimes.com/2012/10/25/mckevitt-expresses-digital-switchover-concerns/

    I might be a luddite but terrestrial TV picture quality is much worse than analogue. Increased bandwidth at the loss of a few shopping channels would be no bad thing.

  2. Dave Orr:

    Could it be that blanket outsourcing is the villain of the procurement piece and the real cause of many of the negative headlines?

    This week’s Radio 4 File on Four dwelt at length on the farcical letting of the Court Translation service to a small outfit that was recommended (on vetting) to have contracts awarded no more than £1m and then was given the whole lot at over £300m!

    Followed by the inevitable takeover (by Capita in this case) to buy the business without the cost & hassle of actually tendering.

    Followed by a DoJ client who couldn’t measure savings and losses through cancelled court hearings and was reduced to parroting contractor savings claims (very like the Cornwall Cabal did with BT before being unseated).

    CSC recently pulled out of Cornwall Council’s procurement, but is that really because they were wary (unlike BT) of over-promising to win the business?

    http://www.computerweekly.com/news/2240169053/CSC-struggling-to-make-a-profit-from-Royal-Mail-outsourcing-deal

    “CSC has sustained the venture to date by cutting 1,082 jobs – 63% of the staff Royal Mail transferred as part of the outsourcing in 2003.

    The job cuts allowed CSC to halve the annual wage bill at CSC Business Systems, from £55m to £25m. This helped save an accumulated £160m over the life of the contract.

    Yet CSC Business Systems has still made an accumulated operating loss of £12m, on a total turnover of £1.5bn.

    Losses would have been higher had the subsidiary not been eligible to claim £61.6m of tax breaks. CSC also buoyed up the outsourcing company with £160m of relief payments – shown in the accounts as ‘amounts owed by parent and fellow subsidiary undertakings’ and ‘group relief receivable’.

    In other recent examples, Southwest One – a local government shared services operation 75% owned by IBM – has struggled to deliver the benefits it promised and needed a loan from IBM to stem losses.”

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