The NAO report on BDUK: what Miller needs to do now

Miller – the search for value begins

It is sad but true that the National Audit Office’s investigation into the value for money from the BDUK Framework procurement has largely vindicated Br0kenTeleph0n3’s reportage over the past three years.

Fearing a repeat of the folly and waste that was the NHS’s National Programme for IT, we hoped that following the BDUK money would alert ministers and civil servants to the fact they were under scrutiny, and that they would be resolute in defending the public interest.

The NAO’s report shows, with understated clarity, that Br0kenTeleph0n3 failed to achieve that goal.

The NAO found that, despite ministers’ and civil servants’ best efforts, BT’s network will benefit from £1.2bn of taxpayers’ money, that BT’s monopoly outside the cities will be further entrenched, that there is no clear way here to assess value for taxpayers’ money, and that whatever BT delivers under the framework will be late and less than “the best broadband network in Europe” the nation was promised.

The NAO offered a number of recommendations and lessons learned, one of which was to benchmark prices to industry standards or a ‘should-cost’ model early in the process. This would inform the assessment of all supplier costs.

The Public Accounts Committee (PAC) will meet to discuss the NAO report on Wednesday. Even as the first drafts of the NAO’s report were doing the rounds in Whitehall, culture secretary Maria Miller moved to limit the damage.

Miller has summoned six would-be community network operators (altnets) from the “Final 10%” to meet BT and BDUK representatives to thrash out a potentially less embarrassing scenario than BDUK has proved. She hopes to offer that as a sop to the PAC.

The six altnets are bidding for money from the £20m Rural Community Broadband Fund (RCBF), which is available only to projects in the “Final 10%”. The amount is trivial in the next generation broadband accounts, and besides, the department of the environment, food and rural affairs (DEFRA) is putting up half.

BT has already said serving these areas, indeed the whole “Final Third”, is “uneconomic”; why then is it fighting so hard to keep out altnets? Why has it insisted that the speed and coverage details of its BDUK-funded roll-out are kept secret?

The official version is that BT’s roll-out is “subject to survey” i.e. it doesn’t know where its assets are or what condition they are in, and that therefore its plans may change. Such a change might result in BT overbuilding an altnet’s network, which is illegal under state aid rules. Better therefore not to risk BDUK money competing with RCBF money by stopping the altnets from building, at least until BT’s finished its bit.

Or, since altnets have to give BT an effective veto over their plans, to let BT cherry-pick the few villages and hamlets that might provide the altnets with a viable user base, and leave the “Final 2%” to the altnets and the satellite operators to mop up after 2017.

This is a seductive argument in terms of political risk. But what if Miller is more imaginative? These six altnets could be the true pilot projects that point the way to a different status quo for rural broadband.

More importantly, they could provide real benchmarks against which to measure BT’s performance. That alone could offer a real shot at extracting  value for taxpayers,  fulfill an NAO key lesson, and provide Miller a meaty bone for the PAC.