BBC lied to Parliament about doomed £100m IT monster, thunder MPs

Axed DMI ballooned and burst while watchdogs sang Kumbaya

Analysis The BBC lied to Parliament by giving MPs and auditors glowing progress reports on a £100m computer project that embarrassingly flopped, it is claimed.

The project in question, the "strategic" Digital Media Initiative (DMI), has now been abandoned at a cost of at least nine figures; a rapid decision by the new BBC Director-General Tony Hall. The DMI was supposed to modernise the broadcaster's storage of footage and other material, but it ballooned out of all proportion.

However, the internal Beeb body with the statutory responsibility to represent TV licence fee-payers’ interests, the BBC Trust, failed to provide oversight and encouraged the expansion of the utopian project, which became a kind of evangelical mission; it is a failing that raises doubts about the current arrangement of “internal arm's-length self-regulation” at the BBC.

Astonishingly, in 2011 the BBC Trust urged that scrutiny of the DMI should look beyond “narrow financial thresholds”, and urged conventional cost-benefit analysis be thrown away or expanded to include new (and intangible) Kumbaya benefits, such as enabling people to do "mash-ups" and third-party access to the BBC archive. The watchdog had gone feral.

This is potentially far more damaging than some recent Auntie scandals. Former BBC Director-General Mark Thompson, now CEO of the New York Times company, and former BBC Future Media chief Erik Huggers, now a corporate veep at Intel, are likely to be summoned to appear before Parliament's Public Accounts Committee to discuss the axed project.

At a committee hearing in Salford on Monday MPs claimed they had been misled about the initiative. Also misled, apparently, was the National Audit Office which reported in 2011 that BBC staff were delighted with the DMI work delivered so far.

In reality, the project was not delivering, had been nicknamed “Don’t Mention It” internally, and some staff were so stressed by DMI they checked into celebrity rehab clinic The Priory – at licence fee-payers' expense, naturally.

In early 2011 the National Audit Office examined the BBC’s handling of the DMI, which started out as an effort to replace outdated tape machines with a system that provided always-on, real-time access to both archive and work-in-progress footage, viewable on any device. Bells and whistles were continually added to the IT project, such as the ability to provide that real-time access to third parties and make the BBC’s archive accessible for kids making mash-ups.

“I believe it will end up saving the BBC and licence payers very significant amounts of money. But we are also going to share this technology with key independent suppliers for the BBC and with other public bodies,” former DG Mark Thompson told the accounts committee in 2011.

“So the idea is to try and get as much value out of this investment as possible. So that's not just the BBC, but independent, commercial companies in this country, and also other public bodies, get the same kind of state-of-the-art ways of manipulating content.”

This evangelism was applauded by the BBC Trust. Senior BBC executives regarded the project as so “strategic” it was one of seven “untouchable” initiatives, on a par with the broadcaster's move to a £1bn production facility up north in Salford. Yet with milestones being missed, staff were obliged to buy new tape machines anyway.

“A number of releases have been successfully delivered and initial feedback from users has been very positive,” the trust gushed in its response to the audit office’s report on the DMI in 2011.

Media pundit Steve Hewlett laid the blame for the £100m fiasco squarely at the door of a “gung-ho” BBC Trust: “Plain bad management compounded by a failure of oversight by the trust,” he argued in the Guardian. Criticism of the trust is rare, for fear of opening a Pandora’s Box – the fear that genuinely independent and effective oversight of the corporation would lead to political interference.

Hewlett echoes and shares these concerns, but when the BBC’s internal review board fails licence fee-payers on such a catastrophic scale – and indeed, compounds it – this sort of technology fiasco becomes inevitable. Once the DMI was brought back in house from the hands of outsourcers, notes Hewlett, the BBC expanded departmental involvement from six to 13 business units.

Clearly, neither the audit office nor the trust were being told the full truth. Members of each body may be angry. But the government's auditors do not have statutory access to the BBC’s information, and tussles to extract further details from the media giant can take months.

Nor is the trust starved of resources. The unit employs at least 60 staff and has a budget of £10m. It’s quite capable of undertaking its own investigations. Bill Garrett, a former head of BBC Vision (aka telly) had written to trust chairman Lord Patten last year, blowing the whistle on the crashingly expensive digital initiative – but it took a new director-general to cancel the project.

In 2011 the BBC Trust declared:

Since bringing the project in-house, the Trust has been satisfied with the progress of the project. We note the NAO’s [National Audit Office's] recognition that the BBC has now started to deliver the DMI system and that users have been positive about the elements delivered. In the context of the DMI being a complex and cutting edge IT project, the Trust considers this is something of which the BBC should be proud.

There then follows an even more intriguing bit:

We consider that the referral thresholds as currently drafted are clear and have worked well to date, ensuring an appropriate balance such that the Trust is involved in strategic rather than the more routine operational decisions. However, we note the NAO’s comments that these are narrow financial thresholds. We agree that we should review these referral criteria in light of the NAO’s comments and consider expanding these to include significant changes to the cost-benefit of a project. The Trust will consider how best to implement this recommendation.

In other words, leave us alone: we’re on a divine mission, one that you accountants can’t measure in pounds and pennies.

But the chairman of Parliament's Public Accounts Committee, Margaret Hodge, said these glowing impressions were based on fiction. At this week's hearing in Salford, she told the BBC's chief financial officer Zarin Patel and Beeb trustee Anthony Fry:

Both the NAO report and the evidence from the BBC suggested that DMI was delivering in practice. What the letter from [whistleblower] Bill Garrett goes on to say is that the reality is at odds with the representation given in the NAO report … So Mr Thompson told us that things were already being used because of this great agile project; then Mr Garrett told us that was not true.

Therefore the evidence given to us was not correct at that time and had you [the BBC] given us the correct evidence we might have come to a very different view to the one we came to when we looked at this.

Fry admitted during the meeting that the Digital Media Initiative was a "complete catastrophe", adding: "At a personal level it is probably the most serious, embarrassing thing I have ever seen."

Last year committee member Richard Bacon summed up the impossible position the trust found itself in:

"There is a fundamental issue here: you are, in the phrase that has been bandied around in the media, at one moment the cheerleader for the BBC and the next moment an external, stern praetorian guard or a regulator trying to oversee what they do, comment on it and, if it is not good enough, do what regulators normally do. You are not, apparently, able to do both of those functions very well, and that is the issue,” he told Fry at the time.

So it seems the stern guard was thrown under a bus. Why would this be?

Well, it’s not widely known that cheerleading is written into the BBC’s mission. In addition to “sustaining citizenship and civil society” the broadcaster must (in classic opaque New Labour-speak) “deliver to the public the benefit of emerging communications technologies and services”.

The UK is arguably the most tech-savvy nation on the planet. To anyone puzzled as to why the trust apparently abandoned licence fee-payers and went native, the answer should be found in the ambiguities of the body's 2006 Royal Charter [PDF, 37 pages]. ®

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