Government Criticised for ‘Panic Buying’ PPE and Setting Up ‘VIP Lane’ for Contracts with Conflict of Interest Risk ‘High by Design’

The Government’s approach to PPE procurement during the pandemic amounted to “panic buying”, while the conflict of interest risk from the so-called ‘VIP Lane’ was “high by design”, a new parliamentary has found.

The Commons’ Public Accounts Committee has published its findings into the Department of Health and Social Care’s actions to obtain personal protective equipment – following an agreement made last year for the department to release all papers, advice and correspondence involving ministers and special advisors relating to the contracts awarded to PPE Medpro.

The conclusions the committee has reached are based on this material, although it has stressed that it could not disclose any information that could impact two ongoing investigations into the firm and Conservative peer Baroness Michelle Mone.

PPE Medpro is at the centre of a government legal action to recover £122 million, after it won contracts through the so-called ‘VIP lane’ of suppliers during the Coronavirus pandemic.

Firms processed through this high-priority route – referred by MPs, peers, officials and advisors – were 10 times more likely to be awarded a contract than companies funnelled through other procurement paths. 

The claim, being brought by the Department of Health and Social Care, is looking to recover the full £122 million figure from PPE Medpro, under a contract for it to supply 25 million sterile surgical gowns, which was awarded in June 2020. 

But the Government has refused to be drawn on how it will be able to recover that figure, after Byline Times revealed last month that PPE Medpro’s unaudited accounts, for the year ending 31 March 2022, had just over £4 million in current assets and around £47,000 in cash.

This newspaper was the first to reveal in September 2020 that PPE Medpro had won hundreds of millions in government COVID contracts – just 44 days after being incorporated.

It was given two contracts worth more than £200 million to supply PPE at the height of the pandemic’s first wave. These contracts were awarded without a competitive tender process.

One was for face masks worth some £81 million, the other was for £122 million worth of sterilised gowns to the NHS – the latter of which the Government is trying to recover.

Baroness Mone is accused of lobbying Michael Gove and Lord Agnew at the start of the pandemic in 2020 to secure business for PPE Medpro. She has denied having any relationship with the company.

It has been alleged that millions of pounds worth of the medical gowns were never even used, even though PPE Medpro claims it delivered the contract to its terms and supplied equipment “fully in accordance” with the contracts.

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A High Appetite for Risk

The Public Accounts Committee has already published a number of reports on the Government’s response to the pandemic and its procurement of PPE.

In July 2021, it warned that the “Government risks undermining public trust and accountability for the pandemic response because of departments’ repeated failure to provide a full rationale for key decisions”.

It said that this latest report provides “further strong indications of what this committee has repeatedly found in our work on procurement failings during the pandemic”.

The committee’s new report found evidence of officials working at a very fast pace in extraordinary circumstances to procure PPE that was urgently needed by frontline staff. However, this evidence painted an “overall picture of civil servants trying to fulfil the normal requirements of good contracting but without the time or structures in place to allow them to do this”.

The report found that the Department of Health and Social Care had solicited offers to provide PPE with no tendering process, and received multiple offers from companies without any track record of delivering PPE. 

One such contract was awarded to design company Luxe Lifestyle Ltd. Byline Times reported in July 2020 how it was awarded a £25 million contract – despite having no employees, assets or turnover. 

Under pressure caused by the sudden need for PPE, the committee described a Department of Health and Social Care willing to accept very high levels of risk.

“The risk appetite appears to have been so high at the time that the department does not seem to have responded to the information it was receiving as part of the contracting process in a way that would be appropriate in normal times,” the report states.

It was an approach the committee said was driven by “an overriding impetus to buy”. Although the department did conduct some checks and found a number of contracts that were “sub-optimal”, the subsequent safeguards it put in place were described as “limited”.

Even with these new assurances, the department often bought the products anyway, which the committee pointed out “might be called panic-buying”.

On the so-called ‘VIP Lane’, the committee said: “The risk of conflicts of interest from the High Priority [VIP] Lane was also high by design, and we have seen limited information on how conflicts of interest should be handled within the department should they arise.”

The report criticised the Department of Health and Social Care for a lack of clarity or purpose given to officials when checking whether conflicts of interest existed. 

Based on the evidence made available to the committee so far, MPs could not “comprehensively conclude” whether emails from Baroness Mone, and the route through the VIP Lane, led to the PPE Medpro offer being treated differently by the Government – as opposed to other offers made in the same way.

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Two Ongoing Investigations 

Alongside the Government’s civil case in relation to the disputed PPE Medpro contract, there are two ongoing investigations which the committee said has significantly limited what it is able to comment on or publish at this stage. 

There is a National Crime Agency investigation into PPE Medpro, and a House of Lords Commissioners for Standards investigation into the conduct of Baroness Mone.

Labour’s Dame Meg Hillier, chair of the Public Accounts Committee, said: “The conclusions included in this report are limited by nature. This is due both to the imperative to not impact ongoing investigations, and the fact the PAC has seen only a snapshot of procurement processes specifically relating to PPE Medpro, rather than a complete picture of the management of similar contracts by the DHSC.

“Our scrutiny of the DHSC’s overall approach to procurement in recent years has established a theme of inadequate financial controls, governance, documentation, and transparency, and poor management of due diligence and conflict of interests.

“Our Committee continues to closely scrutinise these issues, as well as the Government’s approach to public procurement more widely.”

A spokesperson for the Department of Health and Social Care told Byline Times: “We acted swiftly to procure PPE at the height of the pandemic, competing in an overheated global market where demand massively outstripped supply. Due diligence was carried out on all companies and every company was subjected to the same checks. We have launched legal proceedings against the firm in question and as such it would be inappropriate to comment further.”

Just last month, Byline Times was provided with evidence that hundreds of contracts worth more than £7 billion awarded in response to the pandemic had still not been published. This is despite repeated claims to the contrary by senior ministers.