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BBC Fair Trading: BBC Studioworks Group Trading Manual

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BBC Fair Trading: BBC Studioworks Group Trading Manual BBC Fair Trading: BBC Studioworks Group Trading Manual 20 December 2017 1 Introduction This document sets out the specific arrangements the BBC is implementing to set charges for the goods and services BBC Studioworks obtains from the BBC Public Service, and the services that BBC Studioworks sells to the BBC Public Service. Many of these arrangements, and supporting Service Level Agreements, are in place. The BBC expects that all of the arrangements described in this document will be fully implemented by the 2018-2019 financial year. Table 1 summarises the goods and services BBC Studioworks may use from the BBC Public Service, and for which there are arrangements in place. BBC Studioworks will not necessarily use all of these services on a regular basis. Table 2 summarises the goods and services that BBC Studioworks may sell back to the BBC Public Service. Tables 1 and 2 also describe the BBC’s approach to charging for these goods and services. The remainder of this document further describes these goods and services. The BBC has carried out an internal review to ensure that all services potentially traded between the BBC Public Service and BBC Studioworks have been covered by this Manual. This included: A review of activity from both BBC Studioworks and the BBC Public Service; A review of transfer prices from the prior BBC Trust Fair Trading regime; and An accounting review from the BBC’s finance team and a review of transactions from the BBC’s finance’s systems. The activity, service and finance reviews provide assurance that all significant costs are covered by the transfer pricing arrangements. Where any additional or new service activity is identified between the BBC Public Service and BBC Studioworks, then an appropriate transfer pricing process will be put in place. Part of the annual budget process will include a review of the transfer pricing arrangements. This will identify the need for any changes to these arrangements. This Group Trading Manual will be updated each year and published via the BBC website. Each year details of any changes to these methodologies and the impact thereof will also be set out. 2 Table 1: Summary of BBC Studioworks transfer pricing from the BBC Public Service Services Provided Price Basis Rationale Apportionment Methodology External Communications Press Cutting Service Market price from contract External supplier appointed using a Based on pass through cost of BBC agreed with external supplier competitive open market process. Price paid Studioworks subscribers as a percentage of to contractor for service is therefore a total users market price. Media Monitoring Service Market price from contract External supplier appointed using a Based on pass through of third party costs agreed with external supplier competitive open market process. Price paid to contractor for service is therefore a market price. Finance Business Process Operations (IBM Market price from contract External supplier appointed using a Based on proportion of BBC Studioworks Outsourced Processes) agreed with external supplier competitive open market process. Price paid spend of total BBC spend to contractor for service is therefore a market price. Tax and Treasury Verifiable, comparable Benchmarking data provides a market price Based on usage (staff time) information on market price range; the BBC Public Service then uses its internal cost base to set a transfer price in line with the market benchmark HR HR Admin Verifiable, comparable Benchmarking data provides a market price Based on BBC Studioworks’ dedicated FTEs as information on market price range; the BBC Public Service then uses its a proportion of total BBC Group’s FTEs internal cost base to set a transfer price in 3 line with the market benchmark HR Admin Outsourced Market price from contract External supplier appointed using a Based on pass through of costs based on BBC agreed with external supplier competitive open market process. Price paid Studioworks’ allocation by headcount of to contractor for service is therefore a relevant services market price. Internal Communications & Verifiable, comparable Benchmarking data provides a market price Based on allocation by headcount, including Engagement (including Diversity & information on market price range; the BBC Public Service then uses its staff time Inclusion) internal cost base to set a transfer price in line with the market benchmark Legal Legal assistance and advice across Verifiable, comparable Benchmarking data provides a market price Based on usage (staff time) the BBC Group information on market price range; the BBC Public Service then uses its internal cost base to set a transfer price in line with the market benchmark Marketing & Audiences Studio Audience Services: Verifiable, comparable Benchmarking data provides a market price Based on number of stewarded shows used by Stewarding information on market price range; the BBC Public Service then uses its BBC Studioworks internal cost base to set a transfer price in line with the market benchmark Pensions BBC group pension schemes Verifiable, comparable Benchmarking data provides a market price Based on cost of pension scheme provided to information on market price range; the BBC Public Service then uses its BBC Studioworks staff (i.e. number of BBC internal cost base to set a transfer price in Studioworks staff with pension schemes) line with the market benchmark Procurement 4 Corporate Insurance and Market price from contract External supplier appointed using a Based on BBC Studioworks proportion of Production Insurance agreed with external supplier competitive open market process. Price paid cover required from the total market price to contractor for service is therefore a BBC Group pays for insurances. market price. Corporate Insurance and Verifiable, comparable Benchmarking data provides a market price Based on usage (staff time) Production Insurance support information on market price range; the BBC Public Service then uses its costs internal cost base to set a transfer price in line with the market benchmark Property Office and production space in Verifiable, comparable Benchmarking data provides a market price Based on floor space occupied by BBC Elstree information on market price range; the BBC Public Service then uses its Studioworks (m²) internal cost base to set a transfer price in line with the market benchmark Quality, Risk & Assurance Internal Audit Verifiable, comparable Benchmarking data provides a market price Based on usage (staff time) information on market price range; the BBC Public Service then uses its internal cost base to set a transfer price in line with the market benchmark Safety, Security and Resilience Verifiable, comparable Benchmarking data provides a market price Based on use of relevant service by BBC information on market price range; the BBC Public Service then uses its Studioworks’ users internal cost base to set a transfer price in line with the market benchmark Technology Core Technology Service and End Market price from contract External supplier appointed using a Based on use of relevant service by BBC User Compute Service (“EUC”) agreed with external supplier competitive open market process. Price paid Studioworks’ users to contractor for service is therefore a market price. 5 Training – BBC Academy Face to face and online training Verifiable, comparable Benchmarking data provides a market price Based on use courses information on market price range; the BBC Public Service then uses its internal cost base to set a transfer price in line with the market benchmark Development of new courses; Verifiable, comparable Benchmarking data provides a market price Based on the price to develop/deliver new training courses and events information on market price range; the BBC Public Service then uses its courses for BBC Studioworks, including staff (Masterclasses) internal cost base to set a transfer price in time line with the market benchmark Training Courses and Events: Verifiable, comparable Benchmarking data provides a market price N/A – no charge – these course/events are Informal Events information on market price range; the BBC Public Service then uses its provided free of charge as they are open to internal cost base to set a transfer price in external third parties as well as to BBC line with the market benchmark Studioworks Other Verifiable, comparable Benchmarking data provides a market price Based on use, including staff time where information on market price range; the BBC Public Service then uses its relevant internal cost base to set a transfer price in line with the market benchmark 6 Table 2: Summary of BBC Studioworks transfer pricing to the BBC Public Service Services Provided Price Basis Rationale Apportionment Methodology Production facilities and related services Production facilities, equipment Market price from contract as If BBC Studioworks contracts with the BBC Based on facility or service being used (e.g. and crewing; other studio and post agreed with external supplier Public Service on the same basis as all of its type and duration) production services clients. It has a charging framework for its services, then negotiates each contract on the basis of the specification its clients require. Property Office space Verifiable, comparable Benchmarking data provides a market price Based on floor space occupied by the BBC information on market price range; BBC Studioworks then uses its Public Service (m²) internal cost base to set a transfer price in line with the market benchmark 7 Further description of goods and services the BBC Public Service may provide to BBC Studioworks EXTERNAL COMMUNICATIONS Press Cutting Service and Media Monitoring The Press Cutting service includes early bird round ups, BBC daily media news and BBC national press for BBC Studioworks staff identified by the business. Media Monitoring provides a journalist database service to the BBC Group. FINANCE Business Process Operations The BPO service comprises the following elements which are outsourced as a commodity service to IBM: Purchase to Pay, Expenses and Advances, Contributor Payments, Order to Cash, Payroll, and Application and Infrastructure Management.
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