The BBC has made good progress in delivering its Digital Media Initiative in-house since it terminated its contract with Siemens, and is now on course to deliver the complete technology by summer 2011, a Select Committee report has said.
However, the BBC should not have awarded the deal to Siemens without testing the contractor against other suppliers, particularly as there was a high degree of innovation involved, says Margaret Hodge, chairwoman of the Select Committee.
"We are concerned with the ease with which the BBC found over £50m in savings to make up for the losses it suffered through late delivery of the project and its own increased delivery costs. This suggests the need for a more vigilant approach to value-for-money," she said.
The Digital Media Initiative programme was designed to improve the way BBC staff create, use and share video and audio material. But the programme is no longer expected to deliver the overall net financial benefit of £17.9m originally anticipated and will instead cost the BBC £38m.
Under its Technology Framework Contract the BBC let the £79m contract to Siemens in February 2008 without open competition.
The contract covered the delivery of the technology and the operation of the programme until March 2015.
The technology was not delivered and the BBC and Siemens agreed a no-fault termination of the contract with effect from July 2009.