National Audit Office says PPE procurement was done without adequate transparency

Government personal protective equipment (PPE) contracts worth billions of pounds were awarded without transparency and adequate documentation according to a new National Audit Office (NAO) report.

The NAO report examined why particular suppliers were chosen when the government was procuring large volumes of goods and services at high speed to respond to the Covid-19 pandemic and whether potential conflicts of interest were identified and managed.

It found that by 31 July, over 8,600 contracts, worth £18.0 billion had been awarded. Individual contracts ranged in value from less than £100 to £410 million. Of these, 90% of the contracts by value (£16.2 billion) were awarded by the Department of Health & Social Care (DHSC) and its national bodies.

In comparison, in 2019-20 DHSC awarded 174 contracts worth £1.1 billion, less than 7% of what it and its national bodies awarded between January and July 2020 in response to the pandemic.

New contracts worth £17.3 billion were awarded to suppliers, of which £10.5 billion were awarded directly without a competitive tender process and £6.7 billion were awarded directly through pre-existing framework agreements, which would have involved a competitive bidding process when they were set up).

Only £0.2 billion worth of contracts were awarded using a competitive tender process or using a competitive bidding process from a framework agreement. Government also procured goods and services worth £0.7 billion through amendments or extensions to existing contracts.

Standards of transparency and documentation were not consistently met

Gareth Davies, head of the NAO, said: “At the start of the Covid-19 pandemic in the UK, government had to procure large volumes of goods and services quickly whilst managing the increased risks this might entail.

“While we recognise that these were exceptional circumstances, it remains essential that decisions are properly documented and made transparent if government is to maintain public trust that taxpayers’ money is being spent appropriately and fairly. The evidence set out in our report shows that these standards of transparency and documentation were not consistently met in the first phase of the pandemic.”

PPE accounted for 80% of the number of contracts awarded (over 6,900 contracts) and 68% of the total value of contracts awarded (£12.3 billion).

The NAO found that some contracts were awarded retrospectively after work had already been carried out, which risked under performance. For example, a £3.2 million contract was awarded to Deloitte to support the cross-government PPE team’s procurement of PPE on 21 July 2020, with the contract effective from 14 March 2020.

A clear trail of documents to support key procurement decisions was sometimes missing. The Cabinet Office asked the Government Internal Audit Agency to review six PPE contracts that have attracted media attention. The review found that while there was evidence for most controls being applied, there were some gaps in the documentation, such as why some suppliers which had low due diligence ratings were awarded contracts.

The NAO recommends that, should the need to procure significant volumes of goods with extreme urgency arise again, government identifies and manages potential conflicts of interest and bias earlier in the procurement process. Government should ensure that basic information on contracts are published within 90 days of award.