Project Stratum bid evaluation ‘not sophisticated enough’
The scoring system used by the Department for the Economy in the tendering of Northern Ireland’s largest publicly funded investment in broadband infrastructure to date, was ‘not sophisticated enough’ to effectively evaluate a potential £24 million cost in not reaching around 2,500 homes, a Northern Ireland Audit Office (NIAO) report has found.
Project Stratum, a £165 million government investment, identified a target intervention area of around 79,000 premises of low broadband speed which were not planned to be addressed by the investment plans of commercial operators.
Of the two bidders for the tender, BT and Fibrus Networks, only BT outlined an intention to meet 100 per cent of the Department’s intervention area. However, it was Fibrus Networks, who could commit to meeting almost 97 per cent of the intervention area, who would go on to successfully win the tender.
The Northern Ireland Audit Office, in a report published in December 2021, believes that the award of the tender to a bidder which would miss some 2,500 premises, which could be reached by its competitor, was the result of a scoring mechanism for awarding marks that was “not sophisticated enough to provide sufficient consequences for solutions which did not provide 100 per cent coverage”.
The criticism of system sophistication by the NIAO relates specifically to the criteria for coverage, which makes up just 30 marks of the total 100-mark score used by a panel to evaluate the bids.
In the coverage criteria, with a weight of 30 marks, BT scored 30/30 for their proposal of reaching 100 per cent of the Department’s target intervention area. In failing to reach 2,500 properties, Fibrus Networks would cover almost 97 per cent of the target intervention area and the Department’s scoring system crudely calculated 97 per cent of the 30 marks available and awarded Fibrus Networks 29/30.
“While I accept that the scoring method was undertaken in line with the tender documentation issued to bidders, in my opinion it did not make sufficient reduction in the scoring to account for the impact of delivering less than 100 per cent coverage.”
The scale of the apparent oversimplification is evident when recognising that the Department has since estimated that the shortfall in coverage by Fibrus would cost a further £24 million to address, almost 15 per cent of the Department’s total investment in the scheme.
The scoring methodology was defended by the Department as “completely in line with what was set out in the ITT documentation and the requirements set by BDUK and the 2016 State Aid Decision”.
Northern Ireland’s Comptroller and Auditor General, Kieran Donnelly, expressed his surprise that the procurement scoring methodology allowed the solution proposed by Fibrus to score so highly in coverage given that it did not propose to cover the full intervention area and the substantial cost of making up the shortfall.
“While I accept that the scoring method was undertaken in line with the tender documentation issued to bidders, in my opinion it did not make sufficient reduction in the scoring to account for the impact of delivering less than 100 per cent coverage,” he said.
However, Donnelly did go on to recognise that the Department “has done a lot of things well in the procurement, learning lessons from past procurement processes”.
The report also raised questions around whether the level of public subsidy afforded to the project was too high. Highlighting submitted plans to the Department by the unsuccessful bidder BT, shortly after the Department had indicated it intended to award the Project Stratum contract to Fibrus, of planned further investment that would reach 16,000 premises in the intervention area and a further announcement in April 2021 to expand 1Gbps to some rural villages, including some that already featured in the intervention area, Donnelly said that plans by BT to invest in the Project Stratum target intervention area “raises questions” about whether some of the premises included within the project were already commercially viable, and if the overall level of public subsidy afforded to the project was required.
In his report conclusion, Donnelly states: “As the project has only recently commenced, we consider that it is too early to conclude definitively on value for money. However, some of the issues we have identified mean that it will be difficult for the Department to prove that value for money has been maximised.”
Following the publication of the report in January 2021, the Economy Minister Gordon Lyons MLA announced that Project Stratum was to be extended to an additional 8,500 premises at a cost of around £32 million.
