Politically-connected firms were prioritised for Covid contracts, report finds

The government’s emergency procurement efforts in the first few months of the Covid-19 pandemic were plagued by a lack of transparency, contractual errors and potential conflicts of interests, according to a report by the National Audit Office.

In particular, the government’s “high-priority” procurement lane for personal protective equipment, where bids for contracts were ten times more likely to be successful, led to contracts being handed to suppliers with political connections without the standard transparency procedures being used. Overseen by the Department for Health, this scheme was an unusual departure from standard practice.

While the high-priority lane allowed the government to speedily grant contracts to PPE suppliers at a time of extraordinary need, it also eschewed the usual procurement procedures in the process. For instance, “the sources of referrals to the high-priority lane were not always recorded on the team’s case management system,” according to the NAO.

Almost 500 suppliers with links to politicians or senior officials were referred to the high-priority lane, but it was only in 250 instances that the referee’s name was recorded in the government’s case management system. Around 144 referrals originated in the private offices of ministers.

In one instance, an adviser to the government’s Board of Trade made a bid for a contract worth £253 million on behalf of Ayanda Capital, an investment firm, which was processed in the high-priority lane. While the contract was granted, the clear conflict of interest was not declared by the Department for Health. The due diligence checks conducted by the Department did not even include the name of the adviser.

The NAO also found multiple instances where companies were awarded contracts retrospectively, having first been asked to conduct work informally. This increased risks, including underperformance, and further reduced transparency.

An example given is a £550,000 contract which was retroactively granted to Public First for focus groups and communications. While the two directors of the firm have previously worked for Michael Gove in the Cabinet Office, the NAO found “no documentation on the consideration of conflicts of interest, no recorded process for choosing the supplier, and no specific justification for using emergency procurement.”

As the NAO itself notes, government officials were acting under unprecedented pressure; quickly procuring safety equipment was a matter of life and death for health workers. It is understandable that in such conditions, some shortcuts will be made. However, the sheer scale of political connections to companies offered hundreds of millions in government funds raises serious questions.

The failure to register hundreds of potential conflicts of interests risks severely undermining public trust. Any hint of systemic cronyism, taking advantage of a national emergency which has killed tens of thousands and left millions more in economic hardship, will not be tolerated by the electorate.

These may be rather boring systems – and the NAO report is daunting – but dull processes have a habit of sparking national scandals.