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Covid-19 contracts with the private sector

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By early October 2020, the UK government had awarded £12.2 bn worth of contracts related to the coronavirus crisis to private companies since March, 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.

Almost 900 contracts relating to Covid-19 have been signed by the government to secure goods and services. The contracts cover a whole range of products, including medical equipment, tests, personal protective equipment (PPE) for health workers, drugs to treat Covid-19 patients, and services to support the response to Covid-19, including call centres for contact tracing, plus contracts for advising the government on its response to the pandemic.

The vast majority of these contracts were awarded under emergency procedures, under which no competitive tender process has to take place. This means the process of awarding the contracts becomes opaque. The government departments involved, however, must still 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, no award notice has been published for many of the contracts and they are well overdue. 

The table below covers some of the major contract awards related to Covid-19 that have hit the headlines for various reasons.

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.

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.
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.
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.
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.
Test and TraceSerco was initially contracted for £108 million 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 million 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 £100million: a Department of Work and Pensions helpline for people shielding, and assistance with a business helpline.

Serco’s Track and Trace has been heavily criticised, but despite this the company’s contract has been renewed (£57 mn).
Globus (Shetland) UK Ltd
£99.3 mnFFP3 RespiratorsThe firm has donated £400,000 to the Conservative party since 2016.
Randox£133 mnTestsIn 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.
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
Medpro Ltd£112 mn
£81 mn
PPEA new £100 company with no obvious qualifications to supply PPE. It won the first contract worth £112 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”.
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 is 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. Contracts, including these two, were given without competition to small companies.
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.

References:

https://www.theguardian.com/world/2020/aug/06/fifty-million-face-masks-bought-government-cannot-be-used-nhs

https://bylinetimes.com/2020/08/10/companies-linked-to-exclusive-brethren-evangelical-sect-awarded-hundreds-of-millions-of-ppe-government-contracts/

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

https://goodlawproject.org/news/the-ppe-fiasco/

https://www.opendemocracy.net/en/dark-money-investigations/government-accused-of-cronyism-after-tory-councillor-wins-156m-covid-contract/

https://www.ft.com/content/c0d439c8-18ac-499b-8115-da2bc0f18567

https://bylinetimes.com/2020/09/16/company-conservative-donations-government-ppe-procurement-deal/

https://www.theguardian.com/politics/2020/oct/11/mps-launch-legal-action-against-uk-government-over-covid-contracts?CMP=Share_iOSApp_Other

https://www.theguardian.com/world/2020/sep/01/concern-over-opaque-covid-related-contracts-awarded-around-world

https://www.theguardian.com/world/2020/jul/16/uk-government-orders-halt-randox-covid-19-tests-over-safety-issues

https://www.theguardian.com/world/2020/may/11/healthcare-firm-advised-by-owen-paterson-won-133m-coronavirus-testing-contract-unopposed

https://www.theguardian.com/world/2020/may/15/firms-given-1bn-of-state-contracts-without-tender-in-covid-19-crisis

https://www.opendemocracy.net/en/ournhs/serco-and-sitel-get-more-public-money-despite-track-and-trace-fiasco/

https://www.opendemocracy.net/en/dark-money-investigations/revealed-failing-serco-won-another-57m-covid-contract-without-competition/

https://www.thelondoneconomic.com/politics/serco-handed-test-and-trace-contract-with-no-penalties-for-poor-performance/15/10/

https://news.sky.com/story/coronavirus-more-than-1-000-consultants-from-deloitte-on-test-and-trace-programme-12099127

https://www.opendemocracy.net/en/dark-money-investigations/useless-deloitte-accused-of-ppe-failings-amid-covid-19-deal-secrecy/

https://www.thetimes.co.uk/article/108m-ppe-contract-was-given-to-small-pest-control-company-7vw0295rr

https://www.thetimes.co.uk/article/time-to-stop-the-coronavirus-gravy-train-vtsqnwcfc

https://news.sky.com/story/coronavirus-test-and-trace-consultants-paid-equivalent-of-1-5m-salary-12104028

https://www.mirror.co.uk/news/politics/firm-run-ex-associate-tory-22810575?utm_source=twitter.com&utm_medium=social&utm_campaign=sharebar

https://www.hsj.co.uk/coronavirus/revealed-the-private-hospitals-handed-the-largest-covid-19-contracts/7028648.article

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