BT has been forced to pay the British Ministry of Defence £1.3 million in compensation after its staff made sure they met call-answering targets by phoning each other, it emerged today.
They fiddled the figures to help the telecoms giant avoid fines for not answering calls quickly enough as part of a £3 billion-plus Private Finance Initiative (PFI) deal to operate the armed forces’ telephone system.
The scam was exposed in a report by public spending watchdog the National Audit Office, which said it showed the need for better monitoring of the way such projects are being run.
BT sacked some of the “small number of staff” involved and paid £1,021,000 in service payments, the £122,000 cost of investigating the fraud and the £197,000 cost of the sham calls.
The call centre involved, in Kettering, Northamptonshire, is no longer in operation. Tory MP Edward Leigh, who chairs the Commons public accounts committee, said the attempt to rip off the taxpayer was “a real-life Whitehall farce”.
“It says a lot about the MoD’s oversight of its contractors that the Department’s systems failed to spot a serious fraud,” he said.
“BT staff working on the MoD’s PFI telecoms project actually plotted to phone each other in order to beef up their performance statistics for answering calls.
“It was only later that the Department found out it was £1.3 million out of pocket and had to recover this from BT. A real-life Whitehall farce.”
The National Audit Office (NAO) report said the scam was not spotted immediately because it did not have enough impact on the phone service to spark complaints by users and require an investigation.
It eventually came to light within BT - which is now required to provide more detailed reporting and undergo regular detailed checks of the integrity of its reporting system.
Overall, the NAO painted a positive picture of the MOD’s 50 PFI projects - worth some £9 billion in total - finding all but two of the eight it examined had been “delivered satisfactorily, on time and on budget”.
But it called for procurement times to be speeded up, with the average timespan coming in at 37 months, three months more than the rest if Whitehall, and 45 months for the biggest projects.
Tim Burr, head of the National Audit Office, said today: “Most of the private finance projects in its portfolio of more than 50 have been delivered successfully by the Ministry of Defence.
“But the Department needs to be more alert to the risks that can emerge once the project is up and running, such as inaccurate performance reporting.
“It could also reduce procurement times by speeding up its decision-making, and by collecting better information at the outset on current and prospective use of the service and the condition of assets.”
Mr Leigh said: “The Ministry of Defence spends over £1 billion a year on PFI projects alone, so it is vital that it manages risk effectively.
In a statement BT said: "This is a very old incident that has been covered in the media many times and nothing new has been revealed. The staff involved were sacked a long time ago by BT and new measures are in place to the customer's satisfaction."
PA