By Kieran Neild-Ali, Grassroots Assistant
The TaxPayers’ Alliance has kept a close eye on PPE contracts ever since the start of the pandemic. In August, we denounced the government over unaccountable government contracts which ignored its own competitive tendering processes. This resulted in duff contracts being awarded to unreliable companies. In one example, the taxpayer paid an inexperienced investment company £150 million for unusable face masks. Not only was this financially reckless, it also left thousands of NHS staff unprotected against the virus.
The National Audit Office (NAO) has conducted an in-depth investigation into the government's procurement of PPE. Their findings have shed light on what went on. It is easy and perhaps unfair to criticise the government retrospectively for necessarily swift action during a global crisis, with global demand and therefore prices skyrocketing - the main reason for the large amounts of spending which we saw. But some of the government's actions are inexcusable. No government, Conservative or Labour, should get away with this.
Before we delve into the NAO’s damaging findings, it's worth congratulating the government on some aspects of their handling of PPE procurement. The government was malleable and adapted to the massive demand for PPE by establishing a new parallel supply chain to supply the NHS. Public Health England (PHE) stockpiles were insufficient to deal with the crisis, with logistical issues blighting the distribution of PPE to NHS trusts. Rather than wait for PHE to get its act together, the government acted decisively to arm our healthcare workers with the equipment they needed. The quango spent years advocating for a nanny state to restrict our freedom, instead of preparing the UK to deal with a pandemic. Therefore, we were delighted with Matt Hancock’s decision to axe PHE and focus minds on the task in hand.
The parallel supply chain included a team of around 450 staff to find and buy PPE, plus establish a new distribution system. On top of this, the government had to deal with the decline of the global supply of PPE after a fall in exports from China. It was an unprecedented challenge which the government met with vigour.
As a result, 32 billion items of PPE was procured between February and July to manage Covid-19. A testament to the UK’s ability to acquire large amounts of PPE in a relatively short period of time. However, the supply of PPE was tainted by a disregard for value for money, which resulted in bad contracts awarded to unsuitable companies. In some cases, contracts were apparently awarded nefariously to associates.
The cross-government PPE team established an eight-stage process to assess and process offers of support to supply PPE, but not all processes were in place during early procurements. The NAO found that 71 contracts worth £1.5 billion were awarded without financial and company due diligence being carried out. The report also found that of the 71 suppliers only 62 delivered their contract - the rest were cancelled or on-going.
Having to procure goods quickly in a highly competitive international market, the government threw the competitive tender process out the window. In total, new contracts worth £10.5 billion were awarded directly without any competition, giving rise to more wasteful spending. Across all PPE equipment received, 0.5 per cent failed to meet clinical standards and were rendered useless. It may look like a relatively small amount, but given that the UK spent £18 billion on PPE up until June, a 0.5 per cent failure rate adds up to millions of pounds wasted on flawed equipment.
What has made this particularly unpalatable for taxpayers is the fact that the new procurement framework actively sought to offer contracts to those recommended by government ministers, MPs, Lords and civil servants - leading to claims of cronyism in the heart of government.
The cross-government PPE team considered that leads from these sources were more credible and therefore treated them with more urgency, putting them into a high-priority lane alongside the normal lane established to assess and process PPE supply. Almost 10 per cent of these high-priority contacts won contracts compared to less than one per cent of the suppliers that came through the ordinary lane. PPE procurement seemed to reward nepotism, turning its back on competition and wasting millions in the process.
There were plenty of examples that gave this impression. In September, Globus (Shetland) Limited, which has donated more than £400,000 to the Conservatives since 2016, won a £93.8 million Government contract for the supply of respirator face masks. Many taxpayers will wonder if this contract really offers the best value for money.
Competition and an objective tender process are vital for taxpayers, as they ensure that the most competitive and competent bid wins. A proper process also makes it easy to explain why a certain supplier got the job. As a result of cutting corners, the NAO has identified that when lucrative contracts were handed out, the authorities failed to justify their award of the contract:
“departments failed to document fully the consideration and management of risks, such as the justification for using emergency procurement, why particular suppliers were chosen, or how any potential conflicts of interest had been identified and managed.”
With no official reasoning to follow, it suggests government contracts were awarded arbitrarily, with no record of any formal consideration of the risks - failing in their duty to ensure taxpayers’ money is spent wisely. This lack of transparency has shrouded our procurement process in a mist of mistrust and unaccountability.
The procurement of PPE has allowed the impression of chumocracy to blight the tender process and waste taxpayers’ money. Although we can all agree that urgent action was needed to supply the UK’s massive demand for PPE, there is no excuse for the amount wasted on unusable equipment and contracts awarded without competitive tender. The NAO findings are a damning indictment on the government's record of PPE contracts. An efficient, swift and decisive inquiry into the handling of the covid crisis can’t come soon enough.