Siemens Business Services has been announced as the single preferred bidder for the ten-year £2 billion BBC contract to provide technology services for the Corporation which will include the sale of the wholly-owned subsidiary BBC Technology Ltd and the transfer of about 1,400 staff.
The announcement which is subject to contract follows a rigorous EU procurement process and approval by the BBC’s Executive Board.
A shortlist of three bidders included Accenture, Siemens and CSC. The latter dropped out of the process leaving only two companies to compete.
Among other companies originally involved in the bidding were Fujitsu, EDS, Capita, Accenture, IBM, Logica and HP.
The sale is subject to the approval of the Secretary of State for Culture, Media and Sport and clearance by the European Commission under the terms of the EC Merger Regulation.
Subject to the necessary approvals, the deal will complete by autumn 2004 once final contract negotiations are complete.
According to the BBC, Siemens Business Services demonstrated its ability and commitment to invest in technology services and innovation to meet the BBC’s future technology requirements, with significant projected annual cost savings.
Siemens also fulfilled the BBC’s stringent evaluation criteria in the following areas:
- Scale, resource and funding levels to fit with the BBC’s technology vision
- Cultural fit and demonstration of valuing people
- Ability to deliver best value for money in the procurement of technology
- Realise best value for BBC Technology
- Commitment to innovation.
Siemens AG is a German company that can trace its origins back to 1847. It currently employs over 400,000 people worldwide, operating in over 190 countries. Last year the company invested over 5 billion euro in research and development.
Siemens Business Services is one of the world’s leading IT service providers, employing some 34,600 people in 40 countries with annual sales in excess of 5 billion euro.
The move to sell off BBC Technology and put the contract out to tender followed a strategic review of the BBC’s technology requirements for the next decade. This identified potential savings for the BBC of between £20-£30 million a year. A successful sale would also provide much needed cash injection to the corporation which is currently in debt and approaching its statutory borrowing limit.
When the proposed sale was first announced in November 2003 the then director general Greg Dyke assured staff that “We have no plans to sell any other of our commercial subsidiaries”.
However, his successor, Mark Thompson has made it clear that there will be a review of all commercial activities to decide “what is best done inside the BBC with owned-and-operated divisions and what should be done in partnership or with an external contract”.
BBC Technology was created in 2001 to deliver significant savings to the BBC through its contract for technology services and to generate third party revenues.
BBC Technology provides broadcast engineering, satellite distribution and desktop information technology infrastructure services to the corporation.
The decision to sell off the business followed an internal review concluded that for the subsidiary to be competitive further rationalisation would be needed which would have resulted in substantial job losses.