Comment

Covid procurement falls victim to whiff of cronyism

The Government must publish the details of PPE contracts awarded in a hurry to dispel suspicions of misconduct

In any crisis, there is always a business opportunity. This one is no different. While the economy as a whole is going to hell in a handcart, some sectors are booming as rarely before; just ask the medical equipment and pharmaceutical industries.

At the last count, they had enjoyed an £11bn bonus in public procurement contracts for England alone, according to figures supplied by the Department of Health and Social Care. This is fair enough, you might think, in view of the raging Covid 19 pandemic. Almost any price is worth paying to constrain and mitigate the disease.

Yet in so doing, the Government has let standards fall, and is now widely accused within these industries and beyond of scandalously suspending normal competitive tendering processes, vastly overpaying for many goods and services, and in a number of cases outright cronyism.

In an emergency, it is reasonable to act first, and think about normal rules and procedures later. Some things cannot wait.

Indeed, the law deliberately allows for just such a state of affairs. Public contract regulations permit the use of “negotiated procedure without prior publication in cases of extreme urgency” which were unforeseeable by the contracting authority.

Since the pandemic began, this provision has been repeatedly used to bypass normal competitive tendering processes.

Britain is leaving the European Union’s single market in little more than two months time, so whatever Brussels has to say on the matter might seem largely irrelevant.

But for what it is worth the EU has accepted that direct contract awards without resort to tender should be allowed for medical supplies and hospital equipment, at least for the duration of the pandemic. Whether this also applies to stockpiling of medicines and so on is less clear.

Yet once you start down this path, pretty soon it becomes standard practice. Britain is one of the least corrupt countries in the world, a position hard won over many decades. Even in an emergency, it is vital that this reputation for fair play is upheld via dependable levels of disclosure and competition in the use of public money.

In the absence of such transparency, we fast end up with a public procurement policy determined more by who you know than value for money and efficacy. This is the cronyism of the banana republic, not a mature democracy governed by rule of law.

According to the Good Law Project, a not-for-profit campaigning organisation set up by Jolyon Maugham QC that has launched six legal actions concerning Covid-related government contracts, we don’t even know who has won the contracts let alone whether they were awarded after a normal competitive tender in the case of £3.3bn worth of that £11bn of expenditure.

Jolyon Maugham, who set up the Good Law Project in 2017 Credit: Handout

The Government is required by law to publish contracts within 30 days of them being awarded, but hasn’t on a substantial proportion of Covid-related procurement. On average, the Government took 72 days to publish contract award notices in relation to Covid-19 contracts between March and October this year.

This may just be down to more public sector incompetence, but rightly or wrongly it nevertheless adds to suspicion that the Government has something to hide.

Scandal in public procurement is perhaps the least of our worries right now, given the scale of the overarching public health and economic crisis.

Yet it also speaks directly to much wider concerns over the Government’s handling of the pandemic.

In one case, highlighted by a recent National Audit Office report, the Department of Health awarded a series of contracts collectively worth £135.5m for Chinese ventilators to a company only formally incorporated as little as eight months ago called Excalibur Healthcare Services.

The cost averaged £50,000 for each of the 2,700 ventilators supplied, machines that normally sell for around £8,000.

The company cites frenzied international competition for ventilators at the height of the first wave of infection as justification for the prices charged, and claims that its profit margin on the deal was not excessive.

Growing political tensions between Britain and China are said to have further upped the ante. Even so, the taxpayer was well and truly fleeced, this for equipment that in the end was not even needed.

Still at least on this occasion, the Government cannot be accused of cronyism. Sir Chris Evans, the serial biotech entrepreneur who controls and chairs Excalibur, is a major Labour Party donor.

In a number of other directly awarded contracts, six of which are the subject of legal challenge by the Good Law Project, there are clear connections between the companies involved and Government insiders or one time associates.

The most notorious of these was the award of £252.2m of contracts for personal protective equipment (PPE) to a Mauritius-based finance company, Ayanda Capital, headed by the former Kleinwort Benson director Tim Horlick.

A substantial proportion of the face masks supplied were later designated sub-standard. It is unclear whether the Government is seeking repayment for these supplies.

The initial approach on behalf of the company to the Government was made by Andrew Mills, an adviser to the international trade secretary, Liz Truss. Horlick strongly refutes any suggestion of cronyism. Mills also says his position at the Board of Trade played no part in the contract.

In another case being challenged by the Good Law Project, a political research company called Public First was directly awarded five contracts for polling and focus group activity on Covid-related matters.

Public First's husband and wife team have links to Cabinet minister Michael Gove Credit: Barcroft Media

This has raised eyebrows among rival pollsters not just because of the cost, but because Public First is run by the husband and wife team of James Frayne, one-time head of communications for Michael Gove and a close associate of Dominic Cummings, and Rachel Wolf, who co-wrote the last Conservative Party manifesto.

Astonishingly, the Government has chosen to defend the case not on the grounds that the contracts were perfectly lawful, but that the Good Law Project doesn’t have a sufficient economic interest in the matter to have any standing.

This has only added to the suspicion of misconduct in public office, to the consternation of Public First, which believes itself an entirely innocent bystander in any procedural failings there might have been in the procurement process, and certainly not the beneficiary of any cronyism.

Government sources meanwhile accuse the Good Law Project, whose director, Jolyon Maugham QC, is a former adviser to Ed Miliband and a prominent anti-Brexit campaigner, of pursuing a political agenda.

This may or may not be true, but it doesn’t excuse the Government from being held to account. There’s a simple way of dispelling the suspicions; publish the lot, including the detail of how these contracts were awarded.