Early Covid procurement lacked transparency, says NAO

In a report on the award of more than 8,600 contracts, worth £18bn, by 31 July, the NAO raised concerns about the openness of the process and the comprehensiveness of associated paperwork – including details of how suppliers were chosen or how conflicts of interest were identified and managed during the early procurement drive. The auditors added that some contracts were awarded retrospectively, and some were not published in the required timeframe.

The Department of Health and Social Care awarded the bulk of the contracts (90% or £16.2bn by value), dwarfing the £1.1bn worth of contracts awarded by the Department in 2019/20.

Overall, new contracts worth £17bn were awarded, of which £10.5bn were awarded without a competitive tender, with £6.7bn worth of contracts awarded through existing framework agreements.

Personal protective equipment (PPE) accounted for 80% of the contracts awarded by number and 68% (£12bn) of the total value. The Department set up an eight-stage approval process, with support from other departments, in the initial stages to ensure PPE met government standards and to carry out due diligence on the suppliers. This process was later standardised, but before this happened contracts were awarded to 71 firms, worth £1.5bn – 62 of the contracts have been delivered, six are ongoing and three were cancelled.

In the scramble to source PPE, a cross-government team set up a high-priority lane to assess and process potential leads referred by officials, ministers’ offices, MPs, Lords, senior NHS staff and other professionals – the PPE team deemed these referrals as more credible or to be treated with greater urgency.

The NAO report said about one in 10 suppliers in the high-priority route won contracts, compared with less than one in 100 pitching their products through normal routes. The sources of the referrals to the high-priority lane were not always documented in the case management system and the NAO found one case where a supplier was added to the high-priority lane in error.

The NAO said that where there is no competition, it becomes more important for awarding bodies to set out why a supplier has been chosen, and that any risks associated with the lack of competition have been identified and mitigated. In a sample of 20 contracts, the audit body found examples of departments failing to document decisions such as why a supplier was chosen and their consideration of risks.

The findings have led to allegations of cronyism, with companies with links to ministers given priority access. However, the NAO found no evidence of impropriety. ‘In the examples we examined where there were potential conflicts of interest involving ministers, we found that the ministers had properly declared their interests, and we found no evidence of their involvement in procurement decisions or contract management,’ the report said.

Gareth Davies, head of the NAO, (pictured) said at the start of the pandemic the government had to procure large volumes of goods and services quickly, while also managing any associated increased risks.

He added: ‘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.’