MPs Condemn Government’s ‘Rushed’ Awarding of Contracts to Randox
The Public Accounts Committee claims it is ‘impossible to have confidence’ that contracts awarded to the testing provider during the pandemic were ‘awarded properly’, reports David Hencke
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MPs today condemned the Department of Health and Social Care (DHSC) for “woefully inadequate record keeping” in awarding £777 million of COVID testing contracts to the Northern Ireland firm Randox Laboratories and its associated companies, mostly without any competition, during the pandemic.
MPs on the Commons Public Accounts Committee say “it is impossible to have confidence that the contracts were awarded properly”.
An alleged lack of documentation combined with the failure to record minutes of meetings, mainly between Randox and junior health minister Lord James Bethell, meant there were no proper audit trails. The MPs’ report says eight meetings were held, four of them were not declared and only two were minuted.
In addition, Matt Hancock, the former Health Secretary, received undeclared hospitality from Dr Peter Fitzgerald, managing director of Randox, during a ministerial visit to Northern Ireland in 2019. Hancock told MPs that his office considered it to be a political event and therefore did not need to be disclosed. Hancock was given a free night’s accommodation and a meal. He said he had saved the taxpayer one night’s hotel accommodation.
Fitzgerald ‘s company is a regular donor to the Conservative Party, having given a total of £152,600 between 2010 to 2018 to party funds.
The awarding of contracts caused political controversy for former Cabinet minister Owen Paterson, who was lobbying Matt Hancock on behalf of Randox at the time.
Paterson last year faced a 30-day suspension from Parliament for breaching lobbying rules, in relation to his previous efforts to advocate on behalf of Randox, but resigned before Parliament voted on his suspension.
Boris Johnson had intervened on Paterson’s behalf in an effort to relax parliamentary standards rules, but backed down amid the public and political uproar. The Conservatives subsequently lost Paterson’s North Shropshire seat to the Liberal Democrats in a by-election, losing a 23,000-vote majority.
The MPs are very critical of the department’s failure to investigate any potential conflict of interest because of these circumstances.
The report says: “For its first contract with Randox, [worth £132 million] the department failed to identify any conflicts of interest, incorrectly stating at the time that consideration of conflicts of interest was not applicable to that contract award. The department was not able to answer clearly how it makes sure that those involved in procurement give due consideration to potential conflicts of interest in their decision making, even where interests are properly recorded or declared.”
According to the report, the procedure for awarding it was unusual in that it was not signed off by a senior civil servant. Instead, Lord Bethell was authorised to proceed and got it signed off later. The Cabinet Office, which normally approves large contracts, was also by-passed.
The second contract worth £328 million was awarded “despite the performance issues with the first contract, which meant Randox took longer than expected to increase its testing capacity”. The department still awarded it to Randox without competition in October 2020 and appeared by then to have already become “heavily reliant on its services.”
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The report says: “Randox reported a profit of £177 million in the year to 30 June 2021, more than a hundred times greater than its £1.2 million profit for the 18 months to 30 June 2020. The company’s net assets also increased ten-fold in one year, from £17 million in June 2020 to £171 million in June 2021.”
It adds: “The department was… unable to offer a view on whether there had been profiteering on testing contracts. “
Dame Meg Hillier, Labour chair of the Public Accounts Committee, said: “The National Audit Office has been careful to stress that it has not seen any evidence that the Government’s contracts with Randox were awarded improperly. But then, in the case of the hundreds of millions of pounds of contracts awarded to Randox there was precious little evidence to see. Much of the business was won without any competing tenders from companies who may have had better capacity to deliver, perhaps without the upfront capital.
“Add to that the failure to include any performance measures in the first contract, or any protection against excess profits, and this looks just like the rushed policy and contract-making that we’ve seen across so much of the Government’s response to the pandemic. We repeatedly hear the reference to the crisis we were facing as a nation. But acting fast doesn’t mean acting fast and loose.”
A spokesperson for Randox said: “The PAC report is deeply flawed and wrong in assumptions it makes and the conclusions it draws about Randox.
“As the UK’s largest diagnostic company, with four decades of experience, over 2,000 professional staff on hand at the start of the pandemic and more than £350m of prior investment in diagnostic and engineering innovation, Randox was uniquely situated to respond to the national need when COVID-19 emerged in early 2020”.
The company defended its record, saying how “in supporting the UK’s urgent requirement for coronavirus testing Randox reacted with speed, efficiency and flexibility in delivering value. The company developed and built, in record time, the UK’s largest COVID-19 laboratories and testing services. It provided the Department of Health and Social Care [DHSC] with a PCR testing capacity at the time of greatest need, rising from 300 tests per day to 120,000 per day by January 2021.
“Altogether Randox processed over 25 million samples for UK’s National Testing Programme and in support of international travel for business and personal reasons. This played a crucial role in keeping vital elements of the UK economy functioning during lockdowns.
“In adapting to rapidly changing DHSC and Department of Transport requirements, Randox delivered unique value to the government, the national economy and to individuals”.
It also stated that the Public Accounts Committee did not make any contact with Randox, and as such “many elements of its report relating to Randox are false, based as they are, on wrong and unchecked assumptions about the company”.