An Audit Office report has concluded it is not possible to verify that two major broadband projects in Northern Ireland, which received £35.1 million in public subsidy, achieved value for money.
The report found that one of the schemes, which was expected to deliver broadband to 117,600 premises, in fact only improved access in 37,500 premises.
Northern Ireland’s Comptroller and Auditor Kieran Donnelly examined two projects funded by Stormont’s Department for the Economy, the Northern Ireland Broadband Investment Programme (NIBIP) and the Superfast Rollout Programme (SRP2).
Both projects increased broadband connectivity to premises across Northern Ireland.
The report noted that access to broadband, at speeds of up to 30Mbps, is lower in Northern Ireland than any other United Kingdom region, particularly in rural areas.
The Department for the Economy awarded the NIBIP and SRP2 contracts using a national framework established by the United Kingdom Department for Digital, Culture, Media & Sport (DCMS).
The report said this framework provided a mechanism for local bodies to award contracts on a call-off basis and therefore avoid expensive, individual open tender exercises.
But 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 raised concerns 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.
The report said that performance through the NIBIP scheme fell well below the Department for the Economy’s original expectations of delivering broadband to 117,600 premises and, in fact, only ended up improving broadband access to 37,500 premises.
Mr Donnelly said: “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 Covid-19 lockdowns with inadequate access to broadband services, and while any improvement in broadband infrastructure is to be welcome, my report raises significant issues.”
He added: “The outcomes of the NIBIP were considerably below DfE original expectations and were disappointing in terms of the number of premises benefiting from improved broadband access.
“The report concurs with the findings of previous parliamentary committees that use of the DCMS national framework seriously limited competition and provided insufficient transparency over actual costs incurred by the contractor.”
The Audit Office report also noted that the take-up rate for improved broadband was significantly higher than originally estimated.
The report said that BT had estimated that around 20% of customers would access and pay for improved broadband delivered, but the actual take-up has reached 66% for the NIBIP and currently stands at 33% for SRP2.
Both schemes include a mechanism for the Stormont department to recover excess profits because of a higher than expected take-up and it is estimated that around £14 million will eventually be recovered from BT.
But the report suggests that the high take-up rates raise questions over whether either project could have been commercially viable with significantly less public subsidy.
Mr Donnelly added: “While I note that there are mechanisms to claw back part of the public funding, I consider that these high take-up rates could indicate that both projects would have been financially attractive to the private sector even if less public subsidies had been provided.”