Contractor Fail Impacts Some UK Gigabit Broadband Voucher Projects

Some broadband ISPs have told ISPreview.co.uk that they’re allegedly being put into difficulty by payment delays under the Government’s Gigabit Broadband Voucher Scheme (GBVS), which appears to stem from the fact that one of the third-party companies hired to audit related projects has gone into administration.

The original £67m GBVS scheme launched in March 2018 as part of the wider Local Full Fibre Networks (LFFN) programme (here) and was designed to complement the Government’s ambition for making 1Gbps+ (Gigabits per second) capable “full fibre” broadband networks available “nationwide“.

Under this approach vouchers worth up to £2,500 a pop are offered to businesses in order to help them get a new connection installed (leased lines, FTTP etc.), while residents are offered up to £500. GBVS is business orientated and the only way for residents to benefit is as part of a local community group, which must include small businesses (i.e. up to 10 homes can participate for every one SME).

Since then we note that Wales has launched a related scheme (here) and the GBVS has recently been complemented by the launch of the £200m Rural Gigabit Connectivity (RGC) programme (here), which includes even bigger vouchers that are aimed more at homes in rural areas.

Audit Firm Go Bye Bye..

As part of the above scheme’s value for money controls, there is a requirement to conduct audits of certain completed installations to confirm that the installations are compliant with the terms of the scheme. The company appointed – in September 2018 (see contract) – to handle this auditing was Campbell & Kennedy at a contract value of around £1m.

Unfortunately you won’t be able to view C&K’s website today – except via a “sorry for the inconvenience” holding page – because the company went into administration on 22nd July 2019 (here). The details of that situation remain unclear, although we note from their company accounts that they went from a pre-tax profit of £338,690 in 2017 to a loss of -£303,546 in 2018.

Some of the feedback we’ve had from providers suggests that this is already having an impact upon their business (spoken in confidence – names have been removed below).

Example Feedback

“We are a small business supplying full fibre connectivity via the gigabit voucher scheme and the scheme is on the verge of putting us out of business. I am not sure if you are aware but the company who audits the projects has been placed into administration, this means projects cannot be audited and therefore cannot be paid.

This delay is not great news as we still have to maintain relationships with our suppliers who cannot wait forever. We have a number of projects completed with no sign of payment (we have invested over £***,*** in these projects). If we are not paid soon we will be forced out of business (we have thousands of end users so the knock on effect will be pretty big).

However this is not universally true because other ISPs, such as those that have a proven track record of delivered projects for their specific model, won’t have been as strictly audited as others (an algorithm is used to decide). Put another way, auditing can be quite a dynamic process and one that may be applied differently depending upon the provider concerned and the variability of their deployment models. On top of that we’re told that other firms also help with compliance checking, so C&K weren’t the only ones.

Obviously any ISPs that were dependent upon audits being carried out by C&K are likely to be disproportionately affected if the associated company goes bust. We can speculate from some of the feedback we’ve received that DCMS may have opted to wave through some of the less contentious audits in order to minimise delays. Certainly not all ISPs are noticing a big problem, for some it’s just a small delay or none at all.

At issue here is the fact that the vouchers only get paid AFTER the property is connected and live, which of course leaves the provider to fund the build cost until that stage is completed and if you’re waiting on an audit then that could cause additional strain.

Not to mention the pressure of needing to get everything built before the scheme or vouchers expire. Admittedly DCMS tends to suggest that the 12 months (voucher validity period) they allow should give suppliers plenty of time, although in our experience such timings can be very tricky and that’s especially in rural areas or on community build projects.

Sadly DCMS did not provide us with a comment, although they did confirm that one of their third-party suppliers used for compliance checking had gone into administration. The department is expected to appoint an alternative supplier shortly and are in the meantime said to be undertaking priority visits using their own resources (at least they are where there is a risk of impact to payments).

It’s possible that this situation may also be impacting some of the Government’s other contracts with C&K (here), although those tend to fall outside of our field of expertise.