The UK government has made little progress in tackling coronavirus-era fraud in the procurement of personal protective equipment, according to an excoriating inquiry by MPs, which suggests much taxpayer money remains at risk owing to the relaxation of normal scrutiny during the crisis.
The Public Accounts Committee, which monitors public spending, on Wednesday said disputes had yet to be settled on more than 175 PPE contracts struck at the height of the pandemic and worth up to £2.7bn. Suppliers and intermediaries “are likely to have made excessive profits while providing substandard PPE”, it concluded.
Committee chair Dame Meg Hillier said the departure from normal approaches to due diligence, record keeping, decision making and accountability in the purchase of PPE during the health emergency “puts a stain on the UK’s response to the pandemic”.
Even if it was accepted that some procedures would slip at a time of crisis, “the complete collapse of some of the most well-established civil service practices beggars belief”, she said, adding: “The taxpayer will be paying for these decisions for years to come.”
The Department of Health and Social Care spent more than £13bn on PPE during the pandemic. The committee said that although officials estimated total fraud from PPE contracts to be between 0.5 per cent and 5 per cent of overall expenditure, “it was unable to give us any details on how it is progressing any fraud inquiries for these contracts under dispute”.
The majority of disputes concern the quality of the products provided. Some 83 of the 176 contracts are still in the first stage of the commercial resolution process, with a further 59 having entered formal commercial discussions, according to the PAC. “At present, no cases have moved into the litigation stage of the commercial dispute process,” the MPs said. The department estimates that 35 per cent of the contracts will not be resolved until next year.
The PAC said officials in the department had carried out “insufficient due diligence checks at the outset of the pandemic to prevent potential profiteering and to identify conflicts of interest”.
While it recognised the need to act quickly at the start of the pandemic to secure vital supplies of PPE, the committee argued there had still been “scope to perform appropriate due diligence, particularly on potential new suppliers”.
The department had acknowledged that before May 2020 “not all due diligence checks on areas such as financial, commercial and legal issues were completed before awarding contracts”, the MPs added.
Moreover, at no point had consideration been given to the extent of the profit margin that potential suppliers would be taking on payments for PPE. In the case of referrals made through the “VIP lane”, where companies received earlier consideration for contract awards, potential conflicts of interest between individuals making referrals and the companies they were referring were not examined, the committee said.
The department now faces a challenge to get rid of an estimated 3.9bn items of surplus stock, the MPs noted. It is looking at selling, donating and recycling PPE items with just under 800mn offloaded so far “but accepts that incinerating PPE may also be necessary” and had engaged two waste management companies to assess the best options available.
However, the department remains unsure about all the PPE it has and where it is located because it has failed to set up a system to catalogue equipment “currently spread across 70 locations in the UK as well as in China”, the committee added.
Labour’s deputy leader Angela Rayner said the inquiry “exposes the Conservatives’ catalogue of scandalous waste”, with ministers opening the door for “fraudsters to rip off the British public”.
The Department of Health and Social Care said that despite “massive inflation in prices and unprecedented global demand”, it had delivered more than 21.4bn items of PPE to frontline staff.
“We have a comprehensive data system in place to allow us to oversee the storage network and dispose of any excess stock,” it said, adding that it took fraud “extremely seriously and is exploring every available option . . . to bring those who commit fraud to account and seek to recover losses”.
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