In a damning report on government procurement processes during the pandemic, the National Audit Office found that a staggering £10.5 billion (out of £18 billion) worth of contracts were awarded without a competitive tender process, and that “standards of transparency and documentation were not consistently met.” The report also confirmed that there was a high-priority channel for potential PPE contracts referred by government officials, ministers, MPs and Lords.
Growing evidence for this ‘chumocracy’ and high-speed VIP lane has been gathered most recently by The New York Times, which found that “in the desperate scramble for protective gear and other equipment, politically connected companies reaped billions.” Of $22 billion (£16.5 billion) worth of pandemic-related contracts awarded up until November, the NYT found that $5 billion (£3.75 billion) was awarded to firms with political connections, $6 billion (£4.5 billion) went to firms with no prior PPE experience and a further $5 billion to firms associated with tax evasion.
Many of the non-tendered contracts either never delivered the PPE or delivered unusable products. Public Health England invoked emergency powers to enable them to issue contracts without due diligence or formal tendering. For example, £25 million was awarded to Luxe Lifestyle Ltd, a company with no employees or trading history.
A list of similarly unsuitable contracts, set out by Brighton Pavilion’s Green Party MP Caroline Lucas in a letter to the Department of Health and Social Care (DHSC), includes £108 million to PestFix, a pest control company; £107.4 million to Clandeboye Agencies Ltd, a confectionery wholesaler; and £28 million to Monarch Acoustics Ltd, makers of shop and office furniture. None of these companies had any prior experience making medical equipment, and the PPE was reportedly never delivered – a huge waste of taxpayers’ money.
Caroline Lucas asserts that 73% of PPE contracts were awarded without any competition. She is one of three cross-party MPs working with the Good Law Project to bring judicial review claims in respect of PestFix, Clandeboye and Ayanda Capital. Ayanda, a company specialising in private equity and offshore trading, with no previous history of providing PPE, was awarded £252 million to produce face masks, most of which were found unsuitable for use by NHS staff. The Good Law Project is challenging this and the other contracts because they were awarded “without advertisement or competition”, thus calling into question their lawfulness.
The government legal department’s initial reply to the Clandeboye claim argues that, in the context of the rapid increase in Covid-19 cases in March and a global demand for PPE, it was clear that “established modes of procuring PPE and other critical supplies were no longer practical”. Indeed, they go on to say: “Against that background, it is wholly fanciful to suggest that DHSC could have run any kind of competitive tendering process or ‘market-testing exercise’.” This response is unsatisfactory to say the least, because it uses the pandemic to excuse the lack of transparency and tendering processes.
Many companies led by, or with links to, Conservative Party MPs and donors have been awarded contracts for PPE, Covid tests or transportation of equipment, giving rise to accusations of cronyism. These include Europa Worldwide Group and Clipper Logistics, both of which are managed or chaired by leading Conservative Party donors, and a firm run by Tory councillor Steve Dechan, which has received contracts worth almost £156 million to provide face shields and PPE.
One of the most controversial contracts was £133 million awarded for testing kits to Randox Laboratories, which employs environment secretary Owen Paterson MP as a consultant. In July the government had to withdraw these kits after safety problems were discovered, but Randox has just been awarded a further £347 million. The Labour Party has challenged the government to explain why such companies, including Public First, run by a friend of Dominic Cummings, have been the recipient of government funding “without any public tender process”.
Obsessed with outsourcing
This is only part of a bigger issue of the government outsourcing aspects of the NHS to the private sector, often without a competitive process. The Labour Party has called on the government to “ditch failing SERCO” (run by Rupert Soames, brother of former Conservative MP Nicholas Soames) after it was awarded a further £57 million to run testing centres, on top of its contact tracing contract of £410 million, despite numerous criticisms of the test and trace system. Rachel Reeves, shadow minister for the Cabinet Office, said: “This government seems obsessed with shovelling huge sums of public money to a handful of outsourcing companies without competition, rigour or accountability.”
In a recent searing Guardian article, George Monbiot argues that the government’s “irrational obsession with the private sector” is symbolised by the appointment of Dido Harding to run the (so-called) NHS test and trace system, despite previous failures at TalkTalk. Astonishingly, there is only one public health expert on Harding’s executive committee. The others are drawn from business and industry, including some of her former colleagues. Monbiot concludes: “The government has bypassed the lean and efficient NHS to create an outsourced, privatised system characterised by incompetence and failure … So much for the efficiencies of privatisation.”
The Good Law Project and Runnymede Trust have just brought legal proceedings against Boris Johnson and Matt Hancock for their appointment of Harding and others, accusing them of cronyism, failing to follow proper recruitment procedures and breaking the Equality Act 2010. Dr Halima Begum, director of the Runnymede Trust, said: “We are calling on the government to ensure proper process is followed and for NHS bodies to be truly representative of the people they protect … The chumocracy has plummeted [to] new lows.”
As the UK enters further severe restrictions and lockdowns, it is time for the government to be called to account for its lack of transparency, failure to follow proper contracting and employment procedures, and wasting public money – not to mention failure to protect the public through the ongoing problems in the test and trace system.
The Good Law Project is primarily funded by members of the public through regular and one-off donations, as well as crowd-funded donations to cover the costs of specific litigation. To support their work, see their crowd-funders for the Crisp Websites Limited case and their new case with the Runnymede Trust.