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£35m broadband procurement structure 'not value for money' says audit report

Two schemes to improve broadband connectivity across the north did not necessarily achieve value for money, according to the Audit Office
Gary McDonald Business Editor

MILLIONS of pounds in public funds handed to telecoms giant BT to increase broadband connectivity across the north didn't yield its expected outcomes, an Audit Office report has concluded.

Two high-profile projects - the Northern Ireland Broadband Investment Programme (NIBIP) and the Superfast Rollout Programme (SRP2) - received £35.1 million in public subsidies.

But a probe by Comptroller and Auditor Kieran Donnelly found that it was "not possible to verify that they achieved value for money".

And he said high take-up rates by customers anyway "could indicate that both projects would have been financially attractive to the private sector even if less public subsidies had been provided."

The report, which in parts is scathing of BT, also found that one of the schemes, which was expected to deliver broadband to 117,600 premises, only improved access in 37,500 premises.

It also said that over the period from 2013 to 2016, BT provided conflicting evidence to various Parliamentary

committees on the cost of the cabinets installed, with estimates varying from £26,500 to £100,000.

But the auditor was told that, on the basis of information provided in relation to NIBIP, the average cost per cabinet was £19,700 in Northern Ireland compared to a UK average cost of £15,500 per cabinet.

It also said the BT framework bid for, and actual delivery under, the NIBIP "fell considerably short of the Department for the Economy’s initial expectations, which indicates that either the department’s initial planning was totally inaccurate or BT’s bid and performance represented poor value for money."

A spokesman for BT subsidiary Openreach told the Irish News: “We have brought it to the attention of the Audit Office that we do not recognise several of the figures quoted in this report.’’

In the last decade in Northern Ireland, public sector subsidies of almost £78 million have been provided to increase the provision of superfast broadband services, yet some areas, particularly Fermanagh and Omagh District, still struggle to get consistent high speeds.

Mr Donnelly's report raised concerns that by the time the Northern Ireland contracts were awarded, only one bidder (BT) remained on the framework.

He also pointed out that the reliance on the contractor to self-certify that costs were "internally consistent and consistent with its commercial investment" was not an adequate control.

He added: “The Covid-19 pandemic has brought into sharp focus our increasing reliance on the internet to communicate, work, learn and shop.

"Many in Northern Ireland have faced lockdowns with inadequate access to broadband services, and while any improvement in broadband infrastructure is to be welcome, my report raises significant issues.”

SDLP economy spokesperson Sinéad McLaughlin said: "This report is extremely worrying and again demonstrates that tendering arrangements on major government projects is woefully inadequate. There has to be proper protection for value for money."

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