The government established a fast-track VIP lane to purchase billions of pounds of PPE from little-known companies with political contacts in the Conservative party, a shocking report has revealed.
With ministers already under fire for fostering a ‘chumocracy’ at the heart of government, the National Audit Office (NAO) found that suppliers with links to Tory politicians were ten times more likely to be awarded contracts than those who applied to the Department of Health and Social Care.
The damning report also found that more than £5 million of taxpayer cash was paid in consultancy fees with close links to ministers – including a £1.5 million deal for two social media consultants from New Zealand who worked on Boris Johnson’s election campaign.
The NAO said the government’s procurement efforts during the coronavirus crisis “diminished public transparency”, and accused officials of failing to meet “standards that the public sector will always need to apply if it is to maintain public trust”.
By the end of July, more than 8,600 contracts worth close to £18 billion had been awarded – and £10.49 billion of those were awarded directly to the supplier without any competition or tendering process. In some instances, due diligence was not carried out until weeks after contracts were awarded.
The “high-priority lane” was open for companies referred by government officials, ministers, MPs and peers – sources “considered to be more credible”, the report said.
Roughly one-in-ten suppliers processed through the VIP channel – 47 out of 493 – obtained lucrative PPE contracts, compared to less than one-in-a-hundred suppliers that came through the ordinary lane.
In one particularly revealing case, PestFix – a pest control firm from Littlehampton in Sussex – was “added to the high-priority lane in error without a referral”, the NAO said. The company, which has net assets of just £18,000, was awarded a £350 million contract to supply PPE to the NHS.
Part of that contract was a deal to buy 25 million FFP2 face masks. After 600,000 of the masks were delivered, it emerged that they were “not in line with the government’s published PPE specifications” – and were therefore unusable. PestFix “is continuing to work” with the Department of Health, the report revealed.
Another fast-tracked company, Ayanda Capital, received a £253 million that was brokered by a businessman who was appointed as an adviser to the Board of Trade by Liz Truss, the trade secretary. Again, ministers ordered 50 million FFP2 masks that were ultimately unusable – because they had the wrong kind of ear loops.
Meg Hillier, chairwoman of the public accounts committee, said the government’s procurement efforts had “ridden roughshod over the taxpayer and ripped up too many of the rules that guard against cronyism.”
“It’s bad enough that it set up a ‘high-priority lane’ to fast-track companies with the right connections,” she said. “But the failure to track how half the companies had ended up on it made it impossible to ensure proper safeguards were in place.”
Gareth Davies, head of the NAO, said: “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.”