POLITICS
16/07/2020 09:21 BST | Updated 16/07/2020 18:40 BST

Spending Watchdog Urged To Probe Government's £5bn PPE Contracts

Exclusive: Labour has formally requested a probe into emergency tenders that bypassed competition rules

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The UK’s spending watchdog has been urged by Labour to investigate the government’s multi-billion pound procurement of protective equipment during the coronavirus pandemic.

The party has written to the National Audit Office to request a probe following the award of a number of contracts without any competition under emergency procedures used by ministers, HuffPost UK has learned.

The move came as it emerged that the Cabinet Office had awarded a £800,000 contract to consultants McKinsey for the “Provision of Consultancy Services for Civil Service Modernisation and Reform”.

The contract suggests that the PM’s adviser Dominic Cummings is driving through his agenda to overhaul the civil service.

Chancellor Rishi Sunak revealed for the first time last week that £15bn has been allocated by the Treasury to spend on PPE (personal protective equipment).

At the end of March, consulting firm Deloitte was chosen by Michael Gove’s Cabinet Office to advise on sourcing of PPE for NHS staff.

As the pandemic spread, soaring demand for masks, gowns and gloves at home and abroad forced the government to abandon the normal processes as speed was the key factor in procuring the items.

The UK government has used the single bidder emergency procurement process - which bypasses usual rules on the need for rival bidders - more than 60 times in April and May 2020. Not all of the contracts have been made public.

Usually, contracts with a value of more than £10,000 have to be advertised and awarded after a competitive tender.

Estimates of the amount spent to date vary, but officials have suggested in a letter to Jo Maugham, director of the Good Law Project which is seeking a judicial review of one of the deals, that the figure could be £5.5bn.

Shadow cabinet office minister Rachel Reeves and shadow health minister Justin Madders have now written to NAO chief Gareth Davies to highlight how many emergency tenders were issued in comparison to other European countries.

They added that contracts to supply PPE were placed with companies with little or no prior experience in the field.

Reeves said: “Transparency in the awarding of public contracts is crucial to good government. The public don’t expect emergency laws to be used inappropriately and have raised questions about a number of contracts which deserve scrutiny.

“Ministers should welcome the independent oversight a National Audit Office investigation can provide.”

ASSOCIATED PRESS
A hospital worker at a protest in April

Madders added: “We understand that due to its failure to prepare properly in the first place that the government had to take urgent action to secure new supplies of PPE.

“However, what we have seen is a chaotic, almost wild west style goldrush with many companies coming forward with no experience in the area being handed significant government contracts.”

When the issue was raised in the Commons during Cabinet Office question time on Thursday, Gove said that he would “absolutely” support the NAO taking a look at the procurement process.

The NAO said that it was already working on several strands of inquiry into the pandemic and procurement, with separate assessments of PPE supplies to the NHS and social care and of ventilator numbers.

The PM’s official spokesman has recently pointed out that 28 billion items of PPE have been procured since the pandemic began.

A government spokesperson said: “Coronavirus has placed unprecedented global demands on PPE supply chains. Almost 28 billion items of PPE have been ordered overall from UK-based manufacturers and international partners to provide a continuous supply in the coming months.

“We’ve been working tirelessly to deliver PPE to protect people on the frontline throughout this global pandemic, and have delivered over 2 billion items of PPE since the pandemic began.

“We have a robust process which ensures that orders are of high-quality standard, meet commercial due diligence and checked for risk and fraud.”

Here’s Labour’s letter in full:

 

Dear Mr Davies,

Government’s handling of procurement of Covid-19 PPE

We are writing to request an investigation into the Government’s handling of procurement of Covid-19 Personal Protective Equipment (PPE).

The Labour Party supports UK manufacturers of PPE playing their full role in protecting front-line workers and we have consistently encouraged the Government to engage with manufacturers and especially those in the UK textiles industries. Regrettably, there are many cases where this has not happened effectively and some of the decisions merit greater scrutiny.

We recognise that the Covid-19 pandemic has been a significant challenge to government, not least because of insufficient PPE stockpile to meet the demand of this pandemic. However, there is also real public concern at some surprising or seemingly irregular arrangements made between the Government and some suppliers. This could lead to significant waste, fraud or inappropriate contracts being awarded. Crucially, such occurrences would present missed opportunities to spend this public money in a better manner achieving a bigger impact from more suitable suppliers.

At the end of March 2020, Deloitte was chosen by the Cabinet Office to assist with the procurement of personal protective equipment for frontline NHS staff. The contract was awarded without competition after the suspension of usual procurement procedures, which require contracts with a value of more than £10,000 to be advertised and awarded after a competitive tender. There could be important lessons learned if Deloitte’s approach and effectiveness was examined in this crucial role.

The UK Government has used the single bidder emergency procurement process over 60 times in April and May 2020. It is notable that other European countries have used single bidder processes on far fewer occasions with Spain doing so on only 2 occasions, Italy and Germany on 11 and 17 occasions respectively. Some of this may rely on extreme necessity, but where this does not apply it is important that this does not become the default approach of Government departments in the months ahead.

It appears that some multi-million pound orders to supply PPE were placed with companies with little or no prior experience in this area. You will be aware that the Government faces a judicial review into the award of a £108m PPE contract to Crisp Websites Ltd (trading as PestFix). A number of other media reports raise compelling questions around the suitability of some businesses for these sizable contracts. Some appear to have had poor company histories or appear to have been dormant in the months beforehand. Others are seemingly linked to tax havens which while raising ethical concerns could also present unfair advantages over the many established businesses paying the appropriate levels of taxes to the UK. There is also concern at apparent links and over-familiarity between a number of outsourcing companies and Conservative politicians or advisers.

We believe an investigation would provide important scrutiny into whether contracts were fairly and appropriately awarded, matching the national interest with the expertise of providers, and it would help ensure that the integrity of public procurement decisions is maintained.

The transparency from Government has fallen significantly short of what is reasonably to be expected even in such demanding times. There is £1.5bn of PPE contracts published so far, yet according to the Financial Times the Government admitted in correspondence to the Good Law Project that there is likely to be around £5.5bn spent so far.

Full transparency is needed to reassure the public both in terms of the process but also to achieve the best outcomes. We want public money to protect those on the frontline who have endured so much during this crisis. A full investigation into the Government’s approach to PPE procurement could help explain recent decisions and ensure lessons can be learned ahead of the important challenges facing the country in the months ahead. Many MPs have been contacted by concerned constituents over these matters. The public would be reassured if their concerns were misplaced.

We therefore request the National Audit Office investigates this matter and publishes its findings as soon as is practicable.

Yours sincerely,

Rachel Reeves MP
Shadow Chancellor of the Duchy of Lancaster and Shadow Cabinet Office Minister

Justin Madders MP
Shadow Health Minister