The Department for Culture, Media and Sport (DCMS), which leads the programme, now expects to hit the target of making broadband speeds of 24Mbps available to 90% of premises in the UK by the end of 2016, compared with an earlier target of May 2015. It expects to raise the figure to 95% some time in 2017.
By June 2013 only 26 of the 44 contracts to provide superfast broadband to rural areas had been signed, and it was forecast that just nine projects would be completed by the target date.
Part of the problem, according to the NAO, is that the framework to attract infrastructure providers has not worked as expected. All the potential suppliers except BT withdrew from the bidding process, leaving the company to win all 44 local projects and the prospect of £1.2 billion in subsidies by the end of the programme.
The report also says there is limited transparency over BT's bids and the DCMS does not have any strong assurances over the costs, take-up assumptions and the extent of contingency.
It makes uncomfortable reading for the government, which is ploughing £500 million into the programme by giving money to local bodies to procure a superfast broadband service.
The NAO says the DCMS should do more to ensure BT's bid prices are reasonable and that it is not including excessive contingency, as well as carefully monitoring costs during the life of a contract.
Need for value
Amyas Morse, Head of the NAO, said: "The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the department's active use of the controls it has negotiated and strong supervision by Ofcom."
The DCMS has acknowledged the concerns, and announced that Culture Secretary Maria Miller has written to small broadband providers encouraging them to take part in talks with the department and BT to identify the areas with the most problems in providing superfast connections.