BT fails to secure phase 2 Devon and Somerset contract
The phase 1 BDUK projects did not present this opportunity but as Devon and Somerset councils have apparently decided not to sign with BT for phase 2 project to help take superfast broadband coverage in the UK to 95% there is now a massive opportunity for those firms who have complained about being left out of the phase 1 contracts.
"CDS’ decision follows lengthy discussions with BT and BDUK – the Government agency responsible for the national broadband roll-out. It emerged that BT could not meet the Government’s and CDS target of achieving 95% superfast broadband coverage by the end of 2017.
BT’s best offer does not meet the public value for money standards required under Section 151 of the Local Government Act. Finance officers who have a fiduciary duty to tax-payers said the offer was high risk.
After seeking clarification from BT about their bid, the Connecting Devon and Somerset (CDS) Partnership have decided to reissue the tender for this work as an open procurement exercise. The local authority partners of CDS are naturally disappointed on behalf of local residents and businesses that they could not agree a contract at this stage.
BT has said they would not be able to deliver the extent of superfast broadband required by 2017, prompting the partnership to re-engage in the market through an open procurement process.
CDS is the largest single superfast broadband programme in England and makes an important contribution to the Government’s national targets for the broadband roll-out".Extract from Connecting Devon and Somerset Press Release
This does not affect the phase 1 roll-out which is meant to deliver 90% superfast coverage as part of its contract which BT are signed up to. Devon County excluding Plymouth and Exeter currently has 60.8% superfast (>30 Mbps) coverage, Plymouth 96.7%, Exeter District 90.7%, Somerset County is 56.7%.
There are no details of what the BT bid actually entailed and it is too early to know who will bid for the work under the open procurement process, it is entirely possible given the size of the CDS footprint and dispersed nature that BT may end up being the only bidder, or a consortium of other smaller providers may work together to provide diverse solutions for varying parts of the contract area.
"This is a huge disappointment for us. BT have let the County Councils down, they have also let the Connecting Devon and Somerset Partnership down, and worst of all they have let residents, communities and businesses in Somerset and Devon down. We have a duty to seek best value for all our residents and their tender for the next phase of the programme was just not up to scratch.
"We are actually aware of the importance of Superfast Broadband for all our residents but we also needed to make sure we got value for money on behalf of our taxpayers. In taking this action we have acted in the best interests of those who live and run businesses in the region and we will now do everything we can to minimise the delay this causes to the programme. CDS will issue more details once timescales for a new procurement are confirmed. CDS will continue to work with BT on the delivery of phase one of the programme to meet the Government’s target of 90% coverage by the end of 2016."Councillor David Hall, Cabinet Member for Somerset County Council
The failure to find a suitable agreement with BT is not too much of a surprise given the level of feeling made public by representatives from the South West in the last month or two and the risk that a new procurement phase might drag on and risk compromising the Governments 2017 95% target will be an embarrassment for the Conservatives.
As things stand it is interesting to watch a game of hard ball, but the holy grail of value for money has to be balanced against improving services for people as soon as possible. What seems very likely now is that BT will ensure it sticks to the letter of its existing contract and no more, and basically we believe that any USC type work for Devon and Somerset will now revolve around satellite based connections.
"BT is committed to making high-speed fibre broadband as widely available as possible and we are disappointed that we have not yet been able to reach agreement on the next phase of the Connecting Devon and Somerset programme. We believe we have made the best possible offer to take superfast broadband coverage beyond the current target of around 90 per cent by the end of next year, taking into account the challenging and remote nature of some locations in the two counties.
Our offer would mean that an additional 34,400 households and businesses in the two counties would have access to superfast broadband by the middle of 2020. A huge engineering operation, would be required, including the laying of thousands of kilometres of fibre optic cable and the installation of over 1000 fibre broadband cabinets and other structures. It is estimated that it would take more than 15 years for BT to get a return on its investment. We will continue to work to try to find a solution."BT spokesperson on CDS contract news
Update Late Friday Just added a late evening response from BT. There is a few days left for the existing EU State Aid approvals, so any procurement process if no last minute deals are reached will be looking at a 6 month to a year pause for new EU approval or a piecemeal approach taken that avoids the need for EU approval.
Update 2 Saturday morning The BT figure of 34,400 represents 5% of the premises across the two counties and at 1,000 cabinets to serve those you get an idea of the low population densities involved, i.e. if cabinets are spread evenly and no FTTP used it would be 34 premises per cabinet. Funding was fairly good at (£45m from Westminster) plus whatever local councils and BT was putting on the table, this means the potential intervention cost per premise was in the £1,000 to £1,700 region and will appear to be less value for money than the phase 1 project. The week was building up to this hardball stand-off and it would not surprise us if a lot of the problem is that BT will not commit to which exact 34,400 premises will be served out of the final 10% at the time of the contract signing. The 2020 finish data seems many years away, but with the existing project due to run for 12 to 18 months more it was always unlikely that 95% by or in 2017 was achievable in Devon and Somerset.
12 months ago we did a theoretical exercise where if every existing Openreach cabinet was enabled for VDSL2 what coverage would that provide across the area, this suggested 80% was the natural level of superfast coverage (24 Mbps) for Devon and Somerset (higher if you include Torbay, Plymouth, North East Somerset) but since then there has been a good amount of Exchange Only work so figures would go higher.