Government Contracts: Covid-19 Debate

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Department: Cabinet Office

Government Contracts: Covid-19

Neale Hanvey Excerpts
Monday 21st June 2021

(3 months, 4 weeks ago)

Westminster Hall

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Cabinet Office
Kate Osborne Portrait Kate Osborne (Jarrow) (Lab)
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It is a pleasure to serve with you in the Chair, Ms Fovargue. I thank my hon. Friend the Member for Gower (Tonia Antoniazzi) for leading this debate and, of course, everyone who took the time to sign the petition. The Government’s approach to procurement during the pandemic has been marred by rampant cronyism and huge wasting of taxpayers’ money. They have shown a consistent track record of handing out contracts to their mates and even breaking the law along the way. Although it was apparent that the Government had to procure large volumes of goods and services quickly to meet demand, that is no excuse for the serious levels of cronyism and corruption that are now becoming apparent.

The National Audit Office investigation into Government procurement showed that the Government awarded £18 billion of contracts, using emergency procurement regulations, to buy goods, services and works to support their response to the pandemic. Some £10.5 billion was awarded directly without any competition, and £6.7 billion was awarded directly to pre-approved suppliers, even though they were not necessarily pre-approved for the products that they were selling. Only £0.2 billion was awarded using a competitive process.

That approach to procurement naturally led to issues of quality. The 50 million face masks bought in April last year, for example, could not be used in the NHS because they did not meet its specifications. More than £2 billion-worth of those contracts were awarded to firms with links to the Tories, and Cabinet members personally intervened to help their associates win lucrative contracts.

Just under two weeks ago, the High Court ruled that the Minister for the Cabinet Office broke the law by acting with “apparent bias” when a £560,000 contract was awarded to Public First without the tender going out for competition. Public First was found by the High Court to be a company with close links to the Minister for the Cabinet Office and former No. 10 aide Dominic Cummings.

In February of this year, the Government’s legal department stated that the cost of defending that case reached £600,000. That was more than the original contract was worth in the first place. It is shocking that the Government used taxpayers’ money to cover up their own lawbreaking, while frontline workers were not adequately protected with the high-quality PPE that they needed, our NHS staff could not be afforded a decent pay rise, and the Government are managing to invest only 20p per child per day in their so-called catch-up plan.

I hope that the Minister will tell us the total amount of taxpayers’ money that has been spent by this Government to cover up the fact that they acted unlawfully in awarding that contract to Public First. Will she tell us what the Government are doing to recover the taxpayers’ money that was handed out to Public First?

The National Audit Office investigation into Government procurement also found specific examples of insufficient documentation being produced on key decisions or on how risks, such as perceived or actual conflicts of interest, were identified or managed. In addition, several contracts were awarded retrospectively or have not been published in a timely manner. The lack of adequate documentation meant that the National Audit Office was unable to give assurances that the Government had adequately mitigated the increased risks arising from emergency procurement or applied appropriate commercial practices in all cases.

There is no doubt that that has severely diminished public transparency and public confidence. We can see the public feelings from the number of people who have signed the petition. Does the Minister agree that the use of emergency procurement powers needs to be wound down, and that all contracts awarded using such powers must be published, with an assumption against redactions and in favour of uploading all contract documents? Let us be clear: none of this has happened in isolation. It is a case of the wealthy elite being given priority, to become wealthier from the pandemic. That is wrong on so many levels.

We know that an independent public inquiry will be held in spring 2022, with the exact scope of the review yet to be determined. Does the Minister agree that the Government’s approach to public procurement during the covid-19 pandemic must be explicitly examined as part of the public inquiry into the handling of the crisis? As the 127,000-strong petition states, there must be a public inquiry

“to ascertain whether contracts had been procured fairly and represent value for money for tax payers.”

The public have a right to know if their money was spent wisely and properly, and they have a right to wider scrutiny of the Government’s response to the pandemic.

Neale Hanvey Portrait Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
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I want to talk not just about contracts that have been awarded, but about contracts that have not—particularly contracts to UK manufacturers and the UK diagnostics sector. The Prime Minister repeatedly tells us he wants to build back better, to level up, to invest in global Britain and so on. However, with regard to lateral flow devices, the Government have signed an undisclosed contract, for an undisclosed sum of money, which I have been trying to get to the bottom of for some time, for Innova lateral flow test devices.

Back in November 2020, I was passed a copy of the test’s data sheet, of the type that comes with any medical device or product. It clearly states that these tests are unsuitable for asymptomatic subjects. In other words, we would be using them for a purpose for which they are neither designed nor licensed. I raised this with the deputy chief medical officer in a briefing on 17 November 2020, and I was assured that they had gone through validation. I was also promised a copy of the information that supported that validation, but it never arrived.

Later that month, in front of the Select Committee, I asked the Secretary of State about his media appearances in the weekend prior to that where he announced the use of lateral flow devices as being almost 100%—“99.6%”—accurate. I asked him about that because there were growing bodies of evidence and opinions in The British Medical Journal—not some rag that was subject to speculation—that these tests were unsuitable for the purposes for which they were about to be employed. I was seriously concerned because there was a possibility that not only would a false positive be incorrect, but a false negative would be incorrect. In-field data suggested that this could be as low as 50%. In other words, the test result was effectively the flip of a coin. It was no more or no less certain than that.

Over time, I have continued to explore this and have tried to hold the Secretary of State to account on this matter. I would reflect on one comment that was made in The BMJ at that time, which was that the Government’s approach to covid testing was an

“unevaluated, under designed and costly mess”.

The Secretary of State’s response to that was that his

“assessment of that description is that it is wrong.”

Fast forward to June this year, and the Food and Drug Administration of the United States—again, not some fly-by-night outfit—said that the covid test kits used in Britain fall under

“Class 1: A situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death.”

The example I used with my staff to try and explain to them why I was so interested in this was quite simple. Using these tests as a gatekeeper for someone who then has a false negative to be allowed into a care home to visit a relative, allows that person, who may be asymptomatic and whose viral shedding it would be difficult to know about, to be among the most vulnerable people.

Accompanying that decision was footage, shown on the BBC, of a relative hugging and kissing their elderly parent in the day room of a care home full of other vulnerable people. I know the Government have tried to be as optimistic as possible throughout this pandemic, and in some respects I congratulate them on that, because it is important to lift the mood of the population at a difficult time. However, it is simply unacceptable to say that something provides reassurance when that is simply not the case.

I could go on to give various other examples, but this was no surprise to the Secretary of State or the chief medical officer. These points were raised repeatedly in the Select Committee. I raised them directly with the chief medical officer. I asked about the concerns, and he admitted that he was an expert in the use of lateral flow devices, but—this relates back to the point that I have just made—he also said:

“If what they are used for is to reduce risk, lateral flow tests have a very substantial benefit. If, on the other hand, they are used to increase risk, so that people start doing in a very risky way things they otherwise would not have done”—

such as going to a care home to visit a relative—

“it becomes a lot more complicated.”

In other words, the tests become quite deadly.

I could give lots of examples, but I have hit as many of the targets as I really want to. However, there are serious issues here, because there are UK providers that have been touted—not by the markets, but by Lord Bethell himself—as being in line for contracts and that are now, again, waiting for those contracts to be honoured. The Minister has announced today that those contracts will now be given to another Chinese provider, Orient Gene. There is something wrong. If the Government truly want to level up the country and expand global Britain, how can it be that Chinese providers of tests that the FDA says are deadly are continuing to be offered contracts, while UK providers are going empty-handed? There are a series of serious questions that need to be answered, and they need to be answered by the Government soon.

Why have the public been led to believe that the tests are reliable, when there have been serious doubts about their usefulness since at least November 2020? Why are the tests repackaged in the NHS branding, and what are the legal implications? Is the NHS taking ownership as the manufacturer? Why has the UK continued for a further two months to use tests that are deemed dangerous by the FDA? Why has there been an extension to the exceptional usage agreement, when we know they are deadly? It is absolutely crazy. Why are UK manufacturers of perfectly useful tests being sidelined for worthless tests?

I would also like to know when the contracts for the tests were signed. Were they signed before the Government knew that they were not licensed for the purpose for which they were going to be used? Who was the Minister who authorised that? These are very serious questions, and I would underline a point that was made by an earlier speaker: an anti-corruption tsar needs to be appointed. Someone needs to come in and have a very hard look at the Government’s action on contracting throughout this pandemic—not just at what has been awarded, but at what has not been awarded.

Deidre Brock Portrait Deidre Brock (Edinburgh North and Leith) (SNP)
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It is a pleasure to serve under your chairship, Ms Fovargue. I thank the petitioners for signing this very important petition, which has led to this extremely important debate.

I will begin by mentioning a few of the Members who have spoken so far, particularly the hon. Member for Gower (Tonia Antoniazzi). I commend her for a truly shocking start—shocking, in that she laid out for us a litany of what was, at very best, an overly relaxed approach from the UK Government to normal procurement processes. On behalf of the public, she asked where the money has gone, which is really key to the debate. She also asked whether the anti-corruption champion of the UK Government will take up this issue, but perhaps not. Perhaps it will be the Chancellor of the Duchy of Lancaster, but perhaps not. Perhaps it will be the Health Secretary or the Prime Minister. Trust in these politicians, I am afraid, is severely lacking. I loved the line that the hon. Member for Gower finished with: “Urgency is not an excuse for cronyism,” which is a statement I heartily endorse.

I note the contribution from the hon. Member for Gravesham (Adam Holloway). I gently say to him that national emergency does not disqualify the Government from proper examination of what look to the public like questionable decisions over very large amounts of public money.

The hon. Member for Hornsey and Wood Green (Catherine West) asked some excellent questions, in particular about the accountability of some of the private businesses that the Government have so hastily entered into contracts with. She mentioned the inappropriate connections between key players, as did the hon. Member for Gower, and called for an integrity and accountability executive, in particular in light of the UK Government’s apparent intention to have prosecution powers removed from the Electoral Commission.

Everyone recognises that governing in a pandemic is not the same as governing in calmer times. In such times, decisions need to be made that are well out of the ordinary. No one would argue that a normal procurement process would be appropriate or timely enough. Perhaps a case could be made that stocks of disposable items should have been higher or contracts should have been in place to secure additional stocks at short notice and at standard cost—those are likely to be issues that the inquiries after the pandemic will look at and make recommendations on—but we can still look at what happened, how the emergency aspects were handled and where the money went, because it is important. We should also be certain that the awarding of contracts was fair.

The terms of this petition are important, the action that the petitioners ask of us is equally important, and the responsibility of any elected politician to answer properly to the electorate is paramount. My own queries of the Government have been less than enlightening. Back in early September last year, I asked the Leader of the House for a debate in Government time on contracts awarded without tendering. I received no such commitment —perhaps you are not surprised to learn that, Ms McDonagh—but I did receive an assurance that did not reassure me: that it was through our “free press” and an “outspoken House of Commons” that we had

“such an honest and un-corrupt country”.—[Official Report, 3 September 2020; Vol. 679, c. 317.]

In March this year, I asked how much was paid out under the contracts in advance of delivery, how much had been clawed back for services or products not delivered and how much the Government were still to pursue in repayments. The Minister replying said that the Government were

“undertaking a stocktake and an audit.”—[Official Report, 9 March 2021; Vol. 690, c. 670.]

I will be pleased if the Minister updates us on the progress of that stocktake and audit.

Back in April, however, a written question of mine asked how many contracts were issued without tendering, what the total value of those contracts was, how many of those contracts required advance payments and how many times the supplier failed to fulfil the contract. I was told that 1,151 contracts, worth an estimated £19 billion, were published by 1 April, the majority of which were let using a direct award. I was told that a number—an unspecified number, but a number—of PPE contracts had advance payments, but that, since different teams within one Department handled different contracts, the information about performance and reclaiming money already laid out was not available and could be gathered only at disproportionate cost. It is interesting to see how costs become disproportionate sometimes, isn’t it? I also got a “disproportionate cost” answer when I asked for the diary of the executive chair of Test and Trace. Perhaps that diary uses a very complicated system.

We have all seen the documentary reportage, in which suppliers of PPE and other equipment spoke about being unable to get through to the Government to offer what they already had, while contracts were being handed out to all and sundry, including chocolate makers and companies that never existed before securing a contract. We heard of the VIP line for people recommended by Ministers. We read the stories of WhatsApp messages with pub landlords. We heard about equipment arriving that was not fit for use, and we heard plenty about shortages causing problems.

We do not need ministerial excuses. We do not need lame explanations or finger-pointing. We just need to know what went on and whether it was all above board, and we need an independent and unbiased review of it. That is why the Government should agree to this very specific inquiry, so that we can see what went on. Furthermore, the Government should be opening up the filing cabinets. Let us see the Cabinet minutes on covid and how decisions were made about securing adequate supplies of PPE, sanitiser, ventilators, drugs, beds for the pop-up hospitals and so on. Let us see the memos and the notes of phone calls made, the emails sent and the directions given to civil servants. Let us see all of that and compare it with what Ministers were told was needed and with what needed to be done to keep people safe and alive.

A disgruntled former employee has recently been dribbling out selected bits of conversations with the Prime Minister and other little snippets. I am sure that reporters have enjoyed covering that, but it is no way to do things. The bitter revenge of a man who proved inadequate does no one any good, so the Government should just do us all a favour: a commitment now to an inquiry into the covid contracts would be good. It should be a full inquiry by an outside source. The Government can make that a judge or an ex-judge, if they want—Lady Hale may well be available. Give her a wide remit and a support team of experts. Ask her to report as early as she can. Give her full access to all documentation and all the resources that she needs to do the job.

When this pandemic passes, it will be important that people can have confidence in their Government again. Scotland will be independent soon and it will not matter so much to us, but for the people of England it will matter a great deal. For once, this Government can do the right thing.

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Julia Lopez Portrait Julia Lopez
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I believe there are cases where that is happening. I would have to go away and double-check, but I am happy to write to the hon. Lady.

We have always made it clear that there would be opportunities to look back and analyse, and to address some of the shortcomings that I have listed on all aspects of the pandemic. As hon. Members will know, the Prime Minister has confirmed that an inquiry will be established on a statutory basis, with full formal powers. That will begin work in spring 2021. As I said earlier, however, procurement during the pandemic has already been extensively reviewed, and Members will be familiar with the NAO report published in November, which I spoke about previously.

Neale Hanvey Portrait Neale Hanvey
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I would like to ask for the Minister’s view on whether there is a perceived or actual impropriety in the way some of the contracts have been handled. I will read you the information that has just come out from the Good Law Project:

“Uniserve Limited is a logistics firm controlled by Iain Liddell. Prior to the pandemic, the firm had no experience in supplying PPE, yet the firm landed a staggering £300m+ in PPE contracts from the DHSC and an eye-watering £572m deal to provide freight services for the supply of PPE. The company shares the same address as Cabinet Minister Julia Lopez MP and is based in her constituency.”

Does that not give you a sense that there might be something in this? The whole issue around conflict of interest is not whether it is real, but whether a member of the public might assume that there is a concern.

Yvonne Fovargue Portrait Yvonne Fovargue (in the Chair)
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Order. I remind the hon. Gentleman that interventions should be shorter and that “you” refers to the Chair.

Julia Lopez Portrait Julia Lopez
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I appreciate the hon. Gentleman’s raising that contract, because it has been a challenge to me as a Minister. As I said earlier, I began this role only in June 2020. I had not been allocated a private office, and I had not been given a portfolio. Then I found myself in a procurement role, and questions are being asked about the company from which I rent a constituency office. As I say, I was not actually in post at the time that that was being decided. The challenge is that questions have been raised that I cannot fully address, because I do not have all the information. I was not party to the contract, so it is a considerable challenge. It is something that my hon. Friend the Member for Gravesham also raised.

Neale Hanvey Portrait Neale Hanvey
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It is all about perception.

Julia Lopez Portrait Julia Lopez
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I appreciate the hon. Gentleman’s concern about perception, but it should actually be about fact. I am happy to address any concerns that he has. I find it extremely challenging to have people raising questions about my integrity in this space, when I do not feel that I have done anything improper. I am happy to get back to him on any questions that he might have, which I have also tried to address in other forums.

We have made it clear that there are opportunities to come back, analyse the situation and conduct reviews. Government procurement during the pandemic has already been extensively looked into by the National Audit Office. The report recognises that the Government needed to act with extreme urgency. The NAO found no irregularities and potential conflicts of interest involving Ministers in the awarding of contracts. The report underlined the importance of transparency in the Government’s procurement activity.

The Government take such matters extremely seriously, and we remain committed to continually improve our processes. To that end, as I mentioned earlier, we have had two independent expert reviews carried out by Nigel Boardman. They were initially internal reviews, but we have published them fully. In the first, he focused on a small number of contracts in the Government Communication Service and made 28 recommendations, 24 of which have already been implemented. The remaining four will be met by the end of the calendar year.

I have been tracking progress on this issue, including the publication of contracts, very closely. Better training of contract managers and commercial and communications staff has begun and there is now a requirement, at the point when a contract recommendation is made, that senior civil servants, special advisers and Ministers declare any interest that is either real or apparent. In his second, wider review, Mr Boardman has identified 28 further recommendations for improvements to procurement processes across Government. Progress is under way to begin the implementation of those, and a full update of progress will be provided to the Public Accounts Committee by July 2021. We are very grateful to Mr Boardman for his ongoing work. That review sits alongside a wider programme of work to reform public procurement, which I am leading.

In December, the Cabinet Office published our Green Paper on this issue, which sets out radical reform to our procurement regulations that will drive much better value for money for the taxpayer. The proposals, which have long been in development, address several areas highlighted in the NAO report, especially mandatory transparency requirements that would ensure that processes and decisions can be monitored by anybody who wishes to do so. The proposals aim to simplify complicated processes, reduce bureaucracy and create a fair, open and competitive system. They will strengthen transparency through the commercial life cycle, from planning and procurement to contract award, performance and completion. We also intend to clarify the rules on procuring in times of extreme urgency or crisis, learning from the difficult experience of this pandemic. The Green Paper consultations resulted in more than 600 responses, which are now being analysed in detail.

It is already Government policy to adopt and encourage greater transparency in commercial activity. Central Government buyers must publish all qualifying tender documents and contracts with a contract value of more than £10,000 on Contracts Finder, but we recognise and regret, as I have expressed already, that there have been delays to publishing some contracts, as raised by the hon. Member for Hornsey and Wood Green. Teams continue to work on publishing all contracts as soon as possible.

Since the High Court’s judgment in relation to the DHSC’s failure to publish some contracts, it has made significant progress. It has now published all known contract award notices and the contract documents for all historical covid-related contracts. As the permanent secretary for the Cabinet Office confirmed to the Public Accounts Committee earlier this month, all Cabinet Office contracts that related to the regulation 32 procedure on direct awards have been published.

The hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) raised very important points about the onshoring of critical manufacturing capability. Project Defend in the Department for International Trade has done a lot of work in that area. Some of the testing specifics I will need to take away and raise with my ministerial colleagues.

I would like to address some of the points raised by the hon. Member for Jarrow, who discussed the recent High Court judgment in relation to the public contract awarded by the Cabinet Office to Public First. I looked back in my role, to better understand the context in which that was contracted, because I received some early questions, when I was first in my ministerial role, that I personally wanted to investigate as well, and I think it might be helpful if I set out a little more of the context.

Back in March, there was no vaccine, no test and trace, and very little knowledge of how best to manage this novel disease. Strong messaging of the kind that could alter behaviours was, at the outset of the pandemic, one of the few tools that we had in our arsenal in the battle against transmission. It followed that the Government Communication Service needed rapidly to assess which messages would have the greatest impact. We needed to turn campaigns around in lightning-quick time, and teams had to be surged to deal with the unprecedented demand for effective comms material. In dealing with such an unforeseen set of circumstances, few officials knew which messages would be sufficiently hard hitting to influence and, most importantly, to change public behaviour.

It was in that context that rapid decisions were made on comms contracts, including the one that was challenged in court. That was for Public First, a research and policy company. It was taken on, alongside BritainThinks, as one of two companies in the market deemed to have the scale, expertise and experience to provide focus-group testing in March. They were both rapidly diverted from existing work to take a snapshot of public reaction. That allowed us in government to test things such as the contain strategy, the early “Stop The Spread” campaign and the “Stay Home” message, which was deemed by the hon. Member for Hornsey and Wood Green in earlier comments to be a waste of money.

A legal challenge was brought against that contract, on three grounds: urgent procurement without competition; the proportionality of its award for six months; and inclusion of non-urgent work. We did not use money, as was suggested by other hon. Members, to cover up, but actually to find out what had happened, so that we could respond to that legal challenge. The judgment found in favour of the Government on two grounds: first, we were entitled to rely on the emergency procurement regulations because of extreme urgency; and, secondly, the terms of the contract, including length, were proportionate in the circumstances. The court ruled that the Government were entitled to award the contract on grounds of extreme urgency, in response to an unprecedented global pandemic. It recognised the very complex circumstances that we were operating in. It also recognised that a failure to provide effective comms would have put public health at risk.

On the one remaining ground of “apparent bias”, the judgment makes it clear that the decision to award the contract was not due to any personal or professional connections, although consideration should have been given to other research agencies, and the process followed should have been more adequately demonstrated when it came to the objective criteria used to select the supplier. The judgment none the less makes it clear that there was no suggestion of actual bias.

We have done a lot of work to address some of the procedural issues that were raised by this case and which I have mentioned, because I had my own concerns about it. Our implementation of the Boardman recommendations, which I have already discussed, has addressed several areas raised in the judgment. I agree with the hon. Member for Jarrow about winding down the use of regulation 32 in comms, and I have done a lot of work in this area.

Ms Fovargue, I apologise for the length at which I have responded to some of the issues raised. These are important issues and ones that I personally want to ensure that the Government are addressing proactively. I am very keen that we also provide greater context for some of the criticisms and challenges brought. It is absolutely fair that the public would have questions on this, and I want to try to address some of those. I am very grateful for the valuable points raised by hon. Members in the course of this debate, but I want to assure people that the Government are taking decisive action to improve transparency around procurement, alongside a full inquiry into the covid pandemic next year.