Hundreds of firms fast-tracked for lucrative Covid contracts after tips from ministers and MPs, report reveals

Ripping up of procurement and transparency rules sharply criticised by spending watchdog – with some deals secured by Tory contacts

Rob Merrick
Deputy Political Editor
Wednesday 18 November 2020 09:17 GMT
‘No transparency’ over government coronavirus deals, watchdog finds

Hundreds of firms were fast-tracked for lucrative potential Covid-19 contracts after tips from ministers and MPs as £18bn was handed out under emergency rules, a damning report reveals today.

The way procurement and transparency rules were ripped up in the scramble for equipment – with some deals secured by Conservative allies – is sharply criticised by the spending watchdog.

Its report confirms a secret “high-priority lane” for favoured firms, with at least 144 put forward from ministers’ private offices as MPs suggested “a possible manufacturer in their constituency”.

The source of more than half of the 493 recommendations has not been identified, of which 47 secured deals – and just 55 per cent of the 1,644 contracts worth more than £25,000 awarded up to the end of July have been published.

The National Audit Office (NAO) said it had found “no evidence of ministerial involvement in procurement decisions”, but criticised a lack of documentation on how conflicts of interest were managed.

Meg Hillier, the chair of the Commons Public Accounts Committee, said the government failings uncovered were “likely to only be the tip of the iceberg”.

“It’s bad enough that it set up a ‘high-priority lane’ to fast-track companies with the right connections. But the failure to track how half the companies had ended up on it made it impossible to ensure proper safeguards were in place,” she said.

And Rachel Reeves, Labour’s shadow Cabinet Office minister, alleged: “The government may be deliberately attempting to cover their tracks, avoid scrutiny or withhold information from the public while wasting taxpayer money.”

Criticism of what has been dubbed a “cronyvirus” culture has grown – the latest revelation being a £21m handout to a Miami firm which acted as a go-between to secure NHS garments.

The NAO investigation examined 20 contracts in detail, including:

* A £253m deal with Ayanda Capital for the purchase of 50 million masks – which could not be used, because they were made with loose ear-loop fastenings, rather than head loops.

It emerged that Andrew Mills – an adviser to the Board of Trade chaired by Liz Truss, the international trade secretary – was a senior adviser to Ayanda Capital.

* Contracts worth almost £3m with artificial intelligence company Faculty, which Cabinet Office minister Lord Agnew owned £90,000 of shares in – although he has since ended his interest in the firm.

* A £350m deal with PestFix, a pest control company, which resulted in 600,000 masks which cannot “be used for their original purpose”. No due diligence was carried out and its placing on the high-priority route was a “mistake”.

* A £550,000 award to Public First – co-owned by a former adviser to Michael Gove – to test the effectiveness of coronavirus advice, with no “justification for using emergency procurement, or any considerations around potential conflicts of interest”.

The Public First contract was among several which were awarded after a firm had begun the work involved.

Gareth Davies, the 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.”

In total, £10.5bn was handed out without a competitive tender process, part of £18bn of awards of which £17.3bn involved new contracts.

Personal protective equipment (PPE) accounted for 80 per cent of the contracts awarded and 68 per cent of the total value of them (£12.3bn).

“PPE needed to be procured quickly during the first few months of the pandemic, when global demand far exceeded supply,” the report acknowledged.

However, the NAO also pointed out that the government’s own guidance “recommends that basic information about the award of all contracts is published within 90 days of the award”.

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