Wednesday 18 November 2020 12:33 pm

Wrong masks, retrospective due diligence and absent records: Litany of govt PPE failure laid bare

A report by the National Audit Office (NAO) has offered examples of some of the failures made by the Cabinet Office when it came to procuring personal protective equipment (PPE) in the early days of the Covid-19 pandemic. 

The investigative report, which was published by the NAO today, has outlined examples of the government handing multi-million pound contracts to small businesses, as well as making orders for the wrong sort of PPE.

Read more: Deloitte handed PPE contract 4 months after it started work

The report investigated the government’s emergency coronavirus procurement during the Covid-19 pandemic up until 31 July 2020 following concerns raised about transparency when awarding lucrative government contracts. 

By 31 July 2020 over 8,600 contracts related to government’s response to the pandemic had been awarded, with a value of £18bn. Contracts ranged in value from less than £100 to £410 million.

Pestfix

The Department for Health and Social Care awarded Pestfix, a Littlehampton-based retailer of pest control products including PPE, a £350m contract. The contract led the government to order hundreds of thousands of the wrong type of face mask.

Pestfix, a family business, was processed through the government’s high priority lane, which meant the cross-government PPE team considered that leads from these sources were more credible or needed to be treated with more urgency. However, according to the NAO, it was a mistake from within the cross-government PPE team to place Pestfix in the high priority lane. 

Read more: Spending watchdog criticises government over £18bn Covid contracts

The government contracted with PestFix to purchase 25 million FFP2 masks for £59m, however the masks were not in line with the government’s published PPE specifications at the time of the order. The government realised its mistake after 600,000 of the FFP2 masks had been delivered, and communicated the error with Pestfix. The masks will not be used and instead might be resold or used elsewhere.  

In place of the remainder of the order, the government requested that PestFix instead supply Type IIR masks – a mask that fitted with the government’s PPE specifications – and varied the contract accordingly. PestFix has delivered 69% of this order to date and is continuing to work with the department.

A statement on Pestfix’s website said: “We welcome the findings of the National Audit Office that any fast-tracking of PestFix was not the result of any false information provided by PestFix. We were awarded contracts solely based on our ability to move quickly and change continually, and by being first to table genuine and competitive commercial offers for medical PPE while supply was rapidly diminishing but the country most needed it.”

Ayanda Capital

The Department of Health & Social Care also pushed Ayanda Capital’s £253m contract through the government’s PPE high-priority lane, following a referral by an NHS official. 

The government again ordered the wrong masks from Ayanda Capital, and did not carry out due diligence checks until after it had signed a contract with the firm.

Read more: Government faces lawsuit over £250m PPE contract with US jewellery firm

The government ordered £155m worth of FFP2 masks, which again were not in line with the government’s published PPC specifications. The masks were received and may be either repurposed or resold, a process Ayanda is assisting with. 

Ayanda has disputed that the FFP2 masks did not meet the required technical standards. CEO Tim Horlick this week wrote a letter to the government that said: “Suggestions that the masks are not fit for purpose or are somehow unsafe to use by frontline NHS workers are simply untrue and we are advised defamatory.”

Ayanda’s website makes no mention of an ability to procure PPE. The business describes itself as: “a London-based family office focused on a broad investment strategy. We specialise in currency trading, offshore property, private equity and trade financing.”

Andrew Mills, who was an adviser to the Board of Trade at the time the contract was established, was a senior adviser at Ayanda Capital. Mills acted as Ayanda’s representative and signed the contract with the Department of Health and Social Care on Ayanda’s behalf on 29 April 2020. 

The only documented consideration of the potential Mills conflict of interest by the Department of Health & Social Care was a standard new supplier form that declared no conflicts of interest, and due diligence checking for political connections for Ayanda directors. However, the due diligence checks, carried out on 2 May 2020 and after the contract had been signed, did not include Ayanda’s senior adviser and did not identify any conflicts of interest. 

City A.M. could not reach Ayanda Capital for comment.

Public First

In March 2020 the Cabinet Office procured focus group and communication services firm Public First to provide focus group research on an informal basis, agreeing to pay Public First for each set of groups without a formal contract. The focus groups were usually booked a week or two in advance. 

The owners of the consultancy firm have previously worked with Michael Gove – the minister for the Cabinet Office. While the NAO  found no evidence Gove had been involved in either the award or management of this contract, the spending watchdog also 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. 

Read more: FTSE 100 dips as coronavirus infections come back into focus

On 5 June 2020, the Cabinet Office awarded a retrospective contract to cover work already carried out from 3 March 2020 onwards and expected of future work. The Cabinet Office paid £550,000 to Public First in total for the work covered by this contract.

Public First has been contacted for comment. 

Cabinet Office minister Julia Lopez said: “We have been dealing with an unprecedented global pandemic that has posed the biggest challenge to the UK in a generation.

“As this report rightly recognises, we needed to procure contracts with extreme urgency to secure the vital supplies required to protect frontline NHS workers and the public and we make no apology for that.

“We have robust processes in place for spending public money to ensure we get critical equipment to where it needs to go as quickly as possible, whilst also ensuring value for money for the taxpayer.

“It is important to maintain the public’s confidence in how we manage their money, and we welcome the NAO’s scrutiny of our processes and recommendations on how they can be improved.”

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