The National Audit Office (NAO) has launched an investigation into the UK government’s outsourcing of its response to the coronavirus pandemic.
Over £18 billion worth of contracts related to the coronavirus crisis were awarded by the government to private companies between March and June 2020. That includes £1.5 billion for firms with close links to the Conservative Party, according to The Times.
The Whitehall spending watchdog says it was prompted to act by a “lack of transparency and adequate documentation” over why particular suppliers were chosen or how the government identified and managed conflicts of interest.
Since the pandemic began, openDemocracy has reported on numerous COVID contracts being awarded without competition, or with terms being kept secret, or other measures which bypass normal transparency requirements. Labour MP Dawn Butler, a member of the House of Commons science and technology select committee, has labelled the absence of oversight in the procurement process a “national scandal”.
“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,” Gareth Davies, Head of the NAO, said.
“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,” he added.
At least £10 billion has been handed to suppliers without a competitive tender process, according to the watchdog. Government contracts are usually awarded after private companies are invited to compete to offer the best value service.
The Department of Health and Social Care has been contacted for comment.
When asked previously about the awarding of contracts, a Department of Health and Social Care spokesperson said: “All contracts to help with our fight against coronavirus have been awarded in line with public contracts regulations, which is consistent with Cabinet Office guidance. This allows the department to directly award contracts to procure goods, services and works with extreme urgency in exceptional circumstances.
“Proper due diligence is carried out for all government contracts and we take these checks extremely seriously.”
Suppliers referred by MPs ‘fast-tracked’
Since the pandemic started, an emergency exemption to procurement laws has allowed the government to award contracts without having to give different companies a chance to bid for them.
Management consultancy firms Deloitte and McKinsey and outsourcing multinationals Serco and Sitel are among those that have been given millions without competitive tender to help the government oversee the crisis.
The NAO said they had found examples where Whitehall departments had failed to explain why they chose a particular supplier or document possible conflicts of interest.
A number of firms given contracts without tender have later been found to have close links to the Conservative Party, prompting accusations of cronyism.
One small, loss-making firm run by a Conservative councillor in Stroud was given a £156m contract to import PPE from China without any competition, openDemocracy revealed last month.
A preliminary investigation by the NAO found that some suppliers have been referred by government officials, minister’s offices, MPs and health professionals through a “high-priority lane”. Suppliers fast-tracked in this way were more likely to be awarded contracts than those processed through standard channels.
The watchdog raised concerns that the sources of referrals for prioritised suppliers were not always documented. In one case, a supplier, PestFix, was added to the high-priority lane in error without a referral.
The vermin control company – which is worth just over £19,000 – was given £108m to provide equipment such as gowns and face masks to the NHS. It was later revealed by the BBC that the protective suits supplied by the company were not tested to the correct standard and that there was “political” pressure to approve them.
The Good Law Project, a non-for-profit group of lawyers, has launched legal action against the government’s decision to award the contract.
The government’s own internal auditor agency raised concerns that some suppliers were handed contracts despite having low due diligence ratings, following a review requested by the Cabinet Office.
“The existence of a fast-track for well-connected companies with links to ministers and officials will do little to quell concerns about cronyism in UK Government procurement,” said Daniel Bruce, chief executive at Transparency International UK.
“Poor paperwork, uncompetitive tendering and large amounts of money create an environment where at worst there is increased risk of corruption – at best poor value for taxpayers’ money,” he added.
Billions remain unaccounted for
The NAO also raised concerns over gaps in the documentation of COVID contracts. Just under half of contracts worth more than £25,000 awarded up to the end of July have still not been published. It was reported last month that of £11 billion in public money handed to private firms between April and September, £3 billion remains unaccounted for.
Contracts are also not being published in a timely manner, according to the auditor. Only a quarter have been made public within the recommended 90 days after being awarded.
Last week, openDemocracy revealed that £38.8 million has been given to Deloitte for its work on the NHS Test and Trace system.
No standalone contract or specification for the accountancy firm’s services have been published – the information was instead revealed in separate official departmental spending data that was quietly released shortly before the US elections.
No penalties for failures
MPs and transparency campaigners have criticised the government for failing to put in place penalty clauses in contracts for poor performance.
Several firms involved in the government’s test and trace programme were awarded fresh contracts despite concerns that the scheme was failing to reduce the spread of the virus.
In October, outsourcing giant Serco, who run a number of contract tracing call centres, were given an additional £57 million to provide COVID test centres, openDemocracy reported.
That same month, statistics published by the Department of Health showed that just under 60% of close contacts were being reached through the test and trace scheme. According to the government’s scientific advisors, at least 80% of contacts must be reached for the system to be effective.