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Covid-19 contracts with the private sector

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By June 2021, the UK government had awarded £31.2 bn worth of contracts related to the coronavirus crisis to private companies since March 2020, according to data collected by Tussell, a data provider that tracks state contracts across all areas of public services. The vast majority of these contracts have been awarded without a competitive tender.

About 60% of these contracts relating to Covid-19 have been signed by the government to secure products and supplies. The contracts cover a whole range of products, including medical equipment, tests, personal protective equipment (PPE) for health workers, and drugs to treat Covid-19 patients. About 39% of the contracts relate to services to support the response to Covid-19, including call centres for contact tracing (test and trace), plus contracts for advising the government on its response to the pandemic.

The table below outlines many of the contracts that have been covered in the media.

Emergency contract tendering and transparency

The vast majority of contracts awarded for products and services related to Covid-19 were awarded under emergency procedures, under which no competitive tender process has to take place.

In November 2020, the National Audit Office (NAO) published two damming reports on the government's buying and outsourcing procedures since March. The reports criticised the use of 'VIP' channels for companies that had connections with MPs, the Conservative party and its contacts, and also the massive amount of money wasted on buying PPE.

A summary of the NAO reports can be found here.

Whilst there appears to be some good reasons for using the emergency procedure in March 2020, they were still being used in April 2021, over a year later. An article in the FT in April 2021 noted that there is growing concern that there has not been a return to open competitive tenders, in particular given the NAO reports highlighting that there was a risk that continuing with the emergency procedures would "undermine public trust."

The use of the emergency procedures meant that the process of awarding the contracts became opaque. The government departments involved, however, still had to publish the final award notice either on the Contracts Finder database or the TED (Tenders Electronic Daily) database, both accessible to the public, within 30 days of the award. Despite these rules, many award notices have not been published yet and are well overdue, others were published late. 

The Good Law Project took the government to court over the delays in publishing the contract award notices. The GLP together with a cross-party group of MPs – Caroline Lucas (Green), Debbie Abrahams (Labour) and Layla Moran (LibDem) – took legal action against the Government for its persistent and unlawful failure to disclose details of COVID-related contracts.

At the start of March 2021, the High Court ruled that the Government had acted unlawfully by failing to publish Covid contracts. The High Court ruled “The Secretary of State acted unlawfully by failing to comply with the Transparency Policy” and that “there is now no dispute that, in a substantial number of cases, the Secretary of State breached his legal obligation to publish Contract Award Notices within 30 days of the award of contracts.”

However, just three days later Boris Johnson stood up in the House of Commons and reassured MPs and the public that all Covid-related contracts were “on the record”. The final Order handed down by the Judge, however, shows that what the Prime Minister told the House was not true.

There are many more questions about how the tendering for contracts related to Covid-19 products and services have been carried out, in particular allegations of cronyism - the awarding of contracts to companies with links to the Conservative party, government and other political figures.

Corruption and cronyism

As outlined in the NAO reports released in November 2020, companies with political connections were ten times more likely to be awarded a contract than companies that did not have such connections. This has led to accusations of corruption and cronyism.

The government split the procurement system into two channels – a high-priority channel for companies with political connections, such as links with government officials, ministers’ offices, MPs and members of the House of Lords, senior NHS staff and other health professionals, and a second channel for those companies without connections to such people.

Companies in the high-priority channel were automatically regarded as more credible, which is in contrast to normal practice when such contacts would be subject to additional scrutiny due to issues of conflict of interest. The NAO also found that there were no written rules for how the high-priority channel should operate.

The system operating seems to have allowed for the awarding of contracts to companies for inexplicable reasons, for example, companies that have no history of PPE procurement or production have been given vast contracts. A good example is one given for £108m to Pestfix a tiny pest control company with net assets of £18,000. Yet another £108m went to a modestly sized confectioner in Northern Ireland, Clandeboye Agencies. And another contract, worth £252m, was awarded to Ayanda, an opaque private fund owned through a tax haven. There is no evidence that either of these companies had previously had any experience in supplying PPE.

The table below contains details of many of these contracts.

To add to the murkiness of the contract awards situation, in June 2021, it was revealed that Matt Hancock and James Bethell both used personal email addresses to conduct business, including PPE and related contracts. Number 10 had previously denied that this happened. The Guardian revealed that a number of emails were copied into Lord Bethell’s private email account, including at least four official exchanges relating to a businessman who was attempting to get government contracts during the pandemic. The Good Law Project has obtained copies of Hancock's and Bethell's emails.

The Covid-19 pandemic has also served to highlight the lack of transparency and the cronyism in the way people are appointed to top positions. The most notable example is the appointment of Dido Harding to head the test and trace service, despite a lack of experience. Her appointment seemed to reflect her contacts with government ministers, in particular Matt Hancock, and her husband being a Conservative MP. The Runnymede Trust and Good Law Project are challenging the appointment of Dido Harding, as well as a string of other appointments which were made with seemingly no advertisement or fair recruitment process.

 

Covid-19 contracts in the news

CompanyValueProduct/ServiceNotes
Ayanda Capital£253 mnFace masksAyanda Capital Limited, a family investment firm, is controlled by the Horlick family via a holding company registered in the tax haven of Mauritius. The company has connections to Liz Truss. Tim Horlick, former investment banker, is chief executive of Ayanda Capital.

The deal was brokered by Andrew Mills, who served as an unpaid adviser to the Board of Trade, chaired by Liz Truss. The Times reported in January 2021 that Mr Mills has used an obscure change in company status to avoid having to disclose details of how much he made from the deal.

Ayanda Capital describes itself as specialising in “currency trading, offshore property, private equity and trade financing”.

The Good Law Project and EveryDoctor challenged the government on this contract, one with PestFix and another with Clandeboyes (see below).

In a legal letter to EveryDoctor and the Good Law Project received in August 2020, the government said that 43.5 mn masks supplied by Ayanda Capital were unsuitable as they had ear-loops, rather than head-loops, and cannot be used by the NHS. The letter also made clear that the initial approach to the government was made by Andrew Mills, an adviser to the international trade secretary, Liz Truss.

This contract is now the subject of legal action over the government’s failure to disclose details of its spending on contracts related to the pandemic.

In October 2020, three cross-party MPs, Caroline Lucas, Layla Moran and Debbie Abrahams, and the Good Law Project, a non-profit-making organisation, filed a judicial review against the government for breaching the law and its own guidance and argued that there are mounting concerns over coronavirus procurement processes. In November 2020, the High Court gave permission to bring the challenge against the decision to award the contracts.

Ayanda Capital was on the VIP list of contacts to be considered by government for contracts due to its links to politicians.
Clandeboye Agencies Ltd£108 mn (total value of two contracts)GownsThe Government has awarded two contracts to Clandeboye, a wholesaler of sweets. There is no evidence that the company has any experience in supplying PPE.

The Good Law Project and EveryDoctor have challenged the government on the awarding of these contracts, together with the contract awards to Ayanda Capital and PestFix.

These contracts are now the subject of legal action over the government’s failure to disclose details of its spending on contracts related to the pandemic.

In October 2020, three cross-party MPs, Caroline Lucas, Layla Moran and Debbie Abrahams, and the Good Law Project, a non-profit-making organisation, filed a judicial review against the government for breaching the law and its own guidance and argued that there are mounting concerns over coronavirus procurement processes. In November 2020, the High Court gave permission to bring the challenge against the decision to award the contracts.

Clandeboye Agencies was on the VIP list of contacts to be considered by government for contracts due to its links to politicians, according to documents released in the court case involving The Good Law Project.
PestFix (Crisp Websites Ltd)Difficult to determine the exact money involved as only one contract worth £32 mn out of 11 contracts awarded has been published. PPEPestFix had no previous experience with the provision of PPE. When awarded the contracts the company only had 16 employees and net assets of £18,000.

The Good Law Project and EveryDoctor have challenged the government on the awarding of these contracts, together with the contract awards to Ayanda Capital and Clandeboyes.

These contracts are the subject of legal action over the government’s failure to disclose details of its spending on contracts related to the pandemic.

In October 2020, three cross-party MPs, Caroline Lucas, Layla Moran and Debbie Abrahams, and the Good Law Project, a non-profit-making organisation, filed a judicial review against the government for breaching the law and its own guidance and argued that there are mounting concerns over coronavirus procurement processes. In November 2020, the High Court gave permission to bring the challenge against the decision to award the contracts.

PestFix was on the VIP list of contacts to be considered by government for contracts due to its links to politicians.
Serco£108 mn up to £410 mn

£45m rising to £90m for a Department of Work and Pensions helpline for people shielding from the virus, £45m for test sites, and £1m to help the Department for Business, Energy and Industrial Strategy to run a business helpline in the light of COVID-led increased demand.

Up to £322mn for 12 months from June 2021
Test and TraceSerco was initially contracted for £108 mn for fourteen weeks up from the contract start date up to the 23rd August, with the option to extend for a longer period up to a value of £410 mn in total.

The contract was directly awarded to Serco by the Crown Commercial Service on behalf of the Department of Health and Social Care (DoHSC) in May. It was not put out to open tender but selected via an existing framework of suppliers.

According to openDemocracy, Serco’s separate COVID contact tracing contract allows Serco to “refine” its own service level agreements, oversee its own monitoring, and also rules out automatic penalties for underperformance. The lack of penalty clauses was confirmed by health minister, Helen Whately, in October 2020.

Serco also holds two further COVID-related contracts totalling nearly £100 mn: a Department of Work and Pensions helpline for people shielding, and assistance with a business helpline.

In June 2021 Serco was awarded a new contract worth up to £322 million to continue running Covid-19 testing sites for another year.

The contract is to operate regional, local and mobile testing centres in England and Northern Ireland.

Serco’s Track and Trace has been heavily criticised, but despite this the company’s contract has been renewed (£57 mn).

In December 2020, a Guardian investigation found that Serco had subcontracted the work to 21 smaller companies, who were using untrained staff.
Globus (Shetland) UK Ltd
£99.3 mnFFP3 RespiratorsGlobus Shetland is owned by Haraldur Agustsson, whose companies have donated more than £425,000 to the Conservative party.

In September 2020, 18 days after a donation of £10,000 to the Conservative party Globus Shetland was awarded a £94 mn contract to supply respirators.
Haraldur Agustsson is a member of the ‘Leader’s Group’, which gives him access to Conservative politicians in exchange for large donations to the party.

Agustsson’s other company, Alpha Solway, has also won £10 million in six COVID-related contracts.
Randox£133 mn
£347 mn
TestsIn March 2020, Randox was awarded a £133 mn contract to produce testing kits for England, Wales and Northern Ireland. Under the contract, the kits are sent to the public and places such as care homes and then delivered back to Randox to check swabs to see if individuals have the virus.

In July 2020, the testing kits were withdrawn after safety problems were discovered.

The firm has employed Owen Paterson, a former Conservative cabinet minister and leading Brexit supporter, as a consultant since 2015. He is currently paid £100,000 a year at the rate of £500 an hour.

In November 2020 it was revealed that a 6 month extension contract worth £347 mn had been awarded to Randox.
Sitel£84.2 mn up to £310 mn
Test and TraceSitel had a contract for £84.2 mn for the initial fourteen week period and £310 mn in total if it were extended. The figures were revealed in redacted contracts published at the end of September 2020.
DeloitteUnknownTest centres management and advice on PPE purchasingBy October 2020, more than 1000 Deloitte consultants were working on Test and Trace at rates of up to £2,360 per day.

Deloitte has been criticised for focusing on purchasing PPE from China and fashion brands and ignoring UK suppliers.
Management consultants - McKinsey, PWC, KPMG, Boston Consulting Group (BCG)Bill for private consultants was at £175 mn in mid OctoberAdviceThe top Covid supplier by volume is PWC, with 20 contracts worth £24 million. McKinsey’s 16 projects add up to £38 million. KPMG was paid almost £1 million for three months’ work on the Nightingale hospital in Harrogate.

Media reports state that the government paid BCG around £10 mn for a team of around 40 consultants to do four months' work on the testing system between the end of April and late August. Consultants could have been paid around £7000 per day.
Double Dragon£2.15 mnMasksThis contract to supply medical and surgical facemasks to the NHS was given to a company, that records show had net assets of £24,000 last year and describes itself as a wholesaler of coffee, tea, cocoa and spices.

Media reports state it has a website advertising its “new 2020 collection of surgical facemasks” and describes itself as a certified supplier to the NHS of medical-grade equipment. However, much of the website includes dummy text, journalists found that the phone number did not work and the company’s business premises are on a residential street in Ilford, Essex.
SG Recruitment UK
£24 mnGownsA healthcare recruitment firm awarded a £24 mn contract to provide protective coveralls to healthcare workers. The award was despite a “going concern” warning from its auditors five months earlier, flagging that the company’s liabilities exceeded its current assets by £376,000.

The auditors signed off the accounts in December despite the warning because SG had “continuing financial support” from its parent company, Sumner Group Holdings. Tory Peer Lord Chadlington sits on the Board Sumner Group Holdings Limited.
P14 Medical Ltd£120 mn (2 contracts)
£156 mn
Face shields, Gowns and other PPEThis small, loss-making firm run by Steve Dechan, a Conservative councillor in Stroud, has been awarded three huge contracts, two for face shields and other equipment, and one for gowns.

The firm suffered significant financial losses in 2019, and its previous track record in PPE procurement is unclear. The company was reported to have just 8 employees.

P14 Medical was on the VIP list of contacts to be considered by government for contracts due to its links to politicians. This was revealed in April 2021 in documents disclosed in a court case involving The Good Law Project.
Medpro Ltd£122 mn
£81 mn
PPEA new £100 company with no obvious qualifications to supply PPE. It won the first contract worth £122 mn just 7 weeks after it was set up. It has also been awarded a second £81 mn contract for PPE.

The company is run by a former business associate of Tory peer Baroness Mone. Medpro was started by Anthony Page on the day he quit as the secretary of the company that deals with Baroness Mone’s “brand”. The company also has links to the Isle of Man.

Since then the company has refused to disclose who its investors are. It is also unclear how the company's bid was processed via the VIP channel for companies with political connections.
Private hospitalsAround £1.6 bnExtra staff and capacityCircle (which acquired BMI Healthcare in 2019) and Spire were each given contracts worth around £350 mn for services. Other large contracts are Ramsay Health Care £271.1 mn, Nuffield Health £165.2 mn, , HCA International £153.2 mn, Care UK £76.3 mn, and Aspen Healthcare £41.6 mn. Other companies received smaller amounts.
Tower Supplies£20.25 mnCoverallsThe Good Law Project reports that Tower Supplies is not a legal entity.

The government has spent at least £708 mn on coveralls, which at the rate they are used is enough to last 36 years. Contracts, including this one, were given without competition to small companies.
Medicine Box Ltd£40 mnCoverallsMicro company with net assets of only £48,840. Highlighted by The Good Law Project.

The government has spent at least £708 mn on coveralls, which at the rate they are used is enough to last 36 years. Contracts, including this one, were given without competition to small companies.
Initia Ventures Ltd£32.56 mn
£16.28 mn
CoverallsIdentified by the Good Law Project as a dormant company with net assets of £100. Despite this it was awarded 2 contracts.

The government has spent at least £708 mn on coveralls, which at the rate they are used is enough to last 36 years.
Unispace£239.6 mnCoverallsHighlighted by The Good Law Project as a company with links to the Plymouth Brethren, an evangelical Christian church.

The government has spent at least £708 mn on coveralls, which at the rate they are used is enough to last 36 years. Contracts, including this one, were given without competition to small companies.
Fleetwood Strategy£124,000Reported as “research into government communications for Covid-19 updates”.A political consultancy co-founded by Isaac Levido who headed the Conservative party’s general election campaign. It was given the contract by the Cabinet Office without a competitive tender. The contract was only published six months after being awarded.
Abingdon Health£10 mn
£75 mn
Rapid virus antibody testing The Good Law Project has found that the Government suppressed an official report that proved there were issues with rapid antibody tests purchased by the Department of Health. Leaked emails reveal the Government blocked Public Health England from publishing their findings until after they could make an announcement that they had purchased one million antibody tests from Abingdon Health.

The Good Law Project has issued judicial review proceedings in respect of the Abingdon Health contract awards. The GLP's case rests on the following grounds:
1. Government’s apparent failure to conduct any lawful or sufficient inquiry or evaluation of the accuracy of the rapid antibody tests.
2. The award of these contracts seemingly without any advertisement or competition between bidders.

In June 2021 emails published by The Sunday Times, showed that Health Minister Lord Bethell held a ‘private meeting’ with Abingdon Health on 1 April 2020 without disclosing this meeting in its transparency data.

The Department of Health and Social Care (DHSC) is required to publish quarterly schedules of ministerial meetings with outside companies, but the 1 April meeting with Abingdon is missing from the departmental records covering the period of April to June 2020.

Lord Bethell held two further meetings with Abingdon Health on 29 April 2020 and 13 May 2020 – these were declared by the DHSC.

Abingdon Health went on to secure two contracts from the DHSC totalling £85million – both deals were awarded without any competition.
Meller Designs£160 mnPPEMeller Designs is run by David Meller a large Tory donor and trustee of the right wing lobby group Policy Exchange. In April 2021 it was revealed in documents made public at a court case brought by The Good Law Project that Meller Designs was on the VIP list of contracts that got preferential consideration for contracts due to political connections.
Luxe Lifestyle£26 mnPPELuxe Lifestyle, CEO Karen Brost, was awarded a £26m contract despite appearing to be insolvent and without any employees. In April 2021 it was revealed in documents made public at a court case brought by The Good Law Project that Luxe Lifestyle was on the VIP list of contracts that got preferential consideration for contracts due to political connections.

References:

REVEALED: Health Minister Lord Bethell failed to declare meeting with firm that subsequently won £85m Covid contract

Mapping the Pandemic: £1 Billion in Contracts Awarded to Conservative Donors – Byline Times

Andrew Mills: Adviser behind bungled £250m mask contract hides earnings

Firm with mystery investors wins £200m of PPE contracts via high priority lane

Good Law Project: Abingdon Health

Tory-linked firm involved in testing failure given new £347m Covid contract

Government gave Covid contract to firm co-founded by Tory pollster

Labour calls for inquiry into purchase of 50m unusable face masks

Companies Linked to 'Exclusive Brethren' Evangelical Sect Awarded Hundreds of Millions of PPE Government Contracts – Byline Times

https://twitter.com/JolyonMaugham/status/1320777848085450752

Good Law Project: The ppe fiasco

Government accused of ‘cronyism’ after Tory councillor wins £156m COVID contract

Britain’s £5.5bn bill for procuring emergency PPE brings scrutiny

Firm That Gave £400,000 to Conservatives Wins £93.8 Million Government PPE Deal – Byline Times

MPs launch legal action against UK government over Covid contracts

Concern over 'opaque' Covid-related contracts awarded around world

UK government orders halt to Randox Covid-19 tests over safety issues

Healthcare firm advised by Owen Paterson won £133m coronavirus testing contract unopposed

Firms given £1bn of state contracts without tender in Covid-19 crisis

Serco and Sitel to get more public money despite track-and-trace fiasco

Revealed: ‘Failing’ Serco won another £57m COVID contract without competition

Serco handed test-and-trace contract with no penalties for poor performance

Coronavirus: More than 1,000 consultants from Deloitte on Test and Trace programme

'Useless' Deloitte accused of PPE failings amid COVID-19 deal secrecy

£108m PPE contract was given to small pest control company

Time to stop the coronavirus gravy train | Comment

Coronavirus: Test and Trace consultants paid equivalent of £1.5m salary

Firm run by ex-associate of Tory peer Michelle Mone wins £112million NHS deal

Revealed: The private hospitals handed the largest covid-19 contracts

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