1.  The BBC is achieving significant procurement savings, but could secure more in a number of areas. Savings across the range of goods and services bought in 2006-07 varied from less than 3% to more than 12% and conceal increased spending in some categories such as the use of temporary staff. Overall 5% was saved, but in five of the BBC's seven categories of spending the savings were lower. For example, the BBC spent some £232 million in the Production Resources and Technology and Broadcast Equipment categories, but saved £7 million (3%). Within six months the BBC should:

• assess the scope for savings in those areas where it has recently saved least, such as Production Resources, Technology and Broadcast Equipment and Marketing Services;
• check whether planned reductions in the use of temporary staff have been achieved, and whether having a managed service system has reduced costs of employing those temporary staff that are needed; and
• identify what areas of procurement spending should fall in line with planned reductions in staff numbers.

2.  The BBC could save money by aggregating its requirements and reducing its supplier management costs. Some £207 million a year of the BBC's spending is not through centrally negotiated contracts, with some £26.5 million of this spread across 14,000 suppliers. Its 38,000 exceptional purchases—for goods and services not available through central contracts—cost six times the average to process. While enabling a wide and geographically dispersed range of suppliers to compete for its business, the BBC should:

• establish clear criteria for assessing which areas of spending should and should not be aggregated into central contracts;
• remind all purchasing staff, including those on temporary contracts, of the availability and cost advantages of central contracts, and the high cost of exceptional requests; and
• provide feedback to those individuals, and their managers, who persistently fail to use the most appropriate procurement route and secure explanations.

3.  The BBC has been paying for unused licenses for its electronic purchasing system. In the light of the Comptroller and Auditor General's report, the BBC has now introduced quarterly reviews and withdrawn 780 licences from staff who were not regularly using the system. The BBC should review all systems it operates under licence to establish whether it is paying for other licences that are not being used.

4.  Despite the savings available from using eAuctions, the BBC had run only five in 2007-08. This Committee has previously highlighted the potential price savings from using eAuctions and the BBC is saving £3 million a year (14%) from the 19 it conducted in the two years to April 2007.[2] The BBC should look for further opportunities to use eAuctions. To drive that process the BBC should establish criteria, for example when its requirement is for similar goods, to identify when eAuctions are appropriate.

5.  The benefits of the BBC's procurement arrangements may be lost when activities are outsourced. Some 45% of BBC spending is on services outsourced to other providers. To get best value from this spending the BBC should satisfy itself that these suppliers are using good procurement practice, and look for opportunities for the BBC and suppliers to aggregate their buying power to the benefit of both. The BBC should, for example, benefit from any reduction in the costs incurred by the providers of its outsourced services.

6.  Despite the BBC Trust having now operated for a year, little has changed in how the value for money of BBC activities are reviewed and BBC spending remains closed to proper independent scrutiny. It is still the case that the Trust alone decides what value for money reviews are conducted on how the BBC spends the public's money. We remain convinced that the only effective way to provide proper scrutiny is for the Comptroller and Auditor General to have the same powers to identify and undertake studies that apply to the other value for money work we examine. As the Trust has never rejected a topic suggested by the Comptroller and Auditor General, we see no reason why it should object to the Comptroller and Auditor General having such powers.