Lessons of the Covid procurement process
At the outset of the Covid pandemic, government was granted extraordinary powers by parliament and made extensive use of emergency procurement regulations to award contracts for goods and services without tender. But the need to act fast did not give government licence to act fast and loose.
The Public Accounts Committee (PAC) has been keeping a close watch on the eye-watering sums of taxpayers’ money spent on Covid. By the end of July 2020, more than 8,600 contracts had been awarded, with a value of £18bn. The lion’s share was let by the Department of Health and Social Care with a total value of £16.2bn.
To set this in context, in 2019-20 the department awarded 174 contracts worth £1.1bn, less than seven per cent of the value of contracts it and its national bodies awarded between January and July 2020 in response to the pandemic. By value, the Department for Education’s group was the second largest (£556m), followed by the Cabinet Office (£279m).
But despite these huge sums, the government did not publish contracts in time and kept poor records of why some companies won multimillion-pound contracts. Of the 1,644 contracts awarded across government up to the end of July 2020 with a value more than £25,000, 75 per cent were not published within the 90-day target.
There are nearly 10,000 sea containers of PPE sitting on docksides and in warehouses costing £6.7m a week to store
Ministers have repeatedly argued that worrying about paperwork was not a priority. But the lack of transparency fuelled concern about the fairness of awards. While millions of people were shielding or tightening their belts, the public was rightly concerned to see middlemen earning enough off the back of taxpayer-funded contracts to buy country estates.
The committee has kept a particularly watchful eye on procurement and supply of personal protective equipment (PPE).
PPE accounted for 80 per cent of the number of contracts awarded, and 68 per cent of the total value. Across government, more than 6,900 contracts were awarded, totalling £12.3bn. In order to triage offers to supply PPE, the government established a “high-priority lane” for recommendations made through ministers, government officials, MPs, and members of the House of Lords. Records on why these companies were fast-tracked were limited or non-existent.
Ministers remain defensive about their approach, but Whitehall has acknowledged that lessons need to be learnt. The Cabinet Office commissioned and accepted the recommendations of a review by Nigel Boardman into Covid-19 contracts to improve procurement processes and the way government manages actual and perceived conflicts of interest. It also accepted in full the National Audit Office’s recommendations for improving procurement.
While the story over PPE contracts is not yet over (only this month we have been alerted to another instance of an established PPE supplier failing to win a contract), the PAC is turning its attention to the PPE stockpile.
There are nearly 10,000 sea containers of PPE sitting on docksides and in warehouses costing £6.7m a week to store. Around 2.1 billion items have been found to be unsuitable for use in medical settings, equating to more than £2bn of taxpayers’ money.
The government is yet to create any robust plans for repurposing and distributing PPE that is not fit for medical use and has not yet identified where costs could be recovered due to undelivered or substandard PPE.
The PAC recently published a report summarising lessons from its 20 evidence sessions on the government’s response to the pandemic.
One of the key messages that we mustn’t lose sight of is that government is spending hard-earned taxpayers’ money. The storage costs for PPE equates to nearly £350m a year. The entire NHS budget in 2019-20 was £123bn (rising to £149bn in the year of the pandemic). On top of that, £37bn has been allocated to the first two years of Test and Trace. This is serious money. The PAC is clear about its role challenging spending and why transparency and value-for-money has never been more important.
Meg Hillier is the Labour MP for Hackney South and Shoreditch and chair of the Public Accounts Committee.
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