What is going on with government Covid contracts?

By Nicholas Barrett and Anthony Reuben
BBC Reality Check

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media captionHancock: Contract publication "second order to saving lives"

During the pandemic, the government has awarded thousands of contracts to private companies, spending billions of pounds of public money in the process.

They cover everything from personal protective equipment (PPE) - masks, gowns and gloves - to services such as researching public opinion about the government's Covid measures.

But the way these contracts have been awarded - and the huge sums of money involved - have led to accusations of a lack of transparency.

The government has also been taken to court with a judge ruling that Health Secretary Matt Hancock "breached his legal obligation" by not publishing details of Covid deals quickly enough.

Mr Hancock told The Andrew Marr Show: "My team were working seven days a week, often 18 hours a day, to get hold of the equipment that was saving lives."

So what are the rules on government contracts, and what has changed during the pandemic?

What are the normal rules?

Usually, when the government needs to buy something, it must start a "competitive tendering process".

A department will publish the specifications of what it wants to buy. Companies are encouraged to bid by saying the price at which they could offer those goods and services, as well as how long it would take, and details such as the quality of the product.

The government then checks that the companies involved would be able to provide what they said they could and signs a contract with the one that offers the best value for money.

This process can take anything from a few months to a few years depending on the complexity of the requirements (whether you're buying say a laptop or a submarine).

The government has pre-approved suppliers, which saves time on checks and will sometimes allow only pre-approved suppliers to bid for particular contracts. Such companies are referred to as being on a framework agreement.

By law, the government is required to publish a "contract award notice" within 30 days of signing any contracts for public goods or services worth more than £120,000. It is also required to publish the details of every contract worth over £10,000.

image copyrightPA Media

What happens in an emergency?

When the procurement rules were updated in 2015, they included a provision that allowed the government to skip the competitive tendering process in certain circumstances.

The government could go directly to a preferred supplier without any competition. This was called making a "direct award".

These are allowed if there is only one possible supplier or in cases of "extreme urgency" due to unforeseeable events - where there is a risk to life, for example.

According to a report published by the National Audit Office (NAO), between March and July 2020, new contracts worth £17.3bn were awarded to suppliers. Of those:

  • £10.5bn were awarded directly without any competition
  • £6.7bn were awarded directly to pre-approved suppliers (although they were not necessarily pre-approved for the products they were selling)
  • £0.2bn were awarded using a competitive process

The government is still obliged to publish the details of large contracts if they're issued by direct award.

image copyrightReuters

Why was this system challenged?

It was the failure to publish details of contracts within the required 30 days that led the judge to rule that the health secretary had acted unlawfully during the Covid pandemic.

The Good Law Project, a campaign group involved in the legal action against the government, estimates that since March 2020, the Department of Health and Social Care has taken an average of 98 days to publish details of Covid-related contracts. The government gives a lower number - saying publication was, on average, 17 days over the 30-day limit.

The public had a right to know where the "vast" amounts spent had gone and how contracts were awarded, the judge said.

"Government had permission to procure equipment at pace and without tendering under the law, but acting fast did not give it licence to rip up record-keeping on decisions," said Meg Hillier, Labour chairwoman of the Public Accounts Committee.

"It did not publish contracts in time and kept poor records of why some companies won multi-million pound contracts,"she said.

And in documents seen by the BBC, government lawyers admitted on 25 February that 100 contacts for suppliers and services relating to Covid-19 - signed before 7 October - had yet to be published. Three days earlier, the prime minister told MPs that the contracts were "on the record for everyone to see".

Most of the contracts during the pandemic were for PPE. The government has managed to buy 8.6 billion items of PPE so far.

But there have been some problems with orders, as the BBC has been reporting throughout the pandemic.

What was the high-priority lane?

In order to help the government choose between the huge numbers of offers it was getting, it introduced a "high-priority lane" on 2 April.

The idea was to treat offers of PPE support with greater urgency if they came from a supplier recommended by ministers, government officials or MPs and members of the House of Lords, from any party.

The NAO report found that up to the end of July, about one in 10 suppliers who had been put in the high-priority lane were then awarded contracts, while the figure was less than one in 100 for other suppliers, outside the lane.

"Of course we fast-tracked the leads that we thought were most likely to get hold of the stuff fastest and they did that," the health secretary said.

A problem was that the Cabinet Office, which led the process, was allegedly "not entirely upfront about how it was done", according to Tom Sasse from the Institute for Government.

"The Cabinet Office did not manage to keep a proper account of who recommended a particular supplier, which opens it up to accusations of cronyism."

A government spokesperson told Reality Check: "Proper due diligence is carried out for all government contacts and we take these checks extremely seriously.

"This process involves all contracts complying with robust rules and processes that prevent conflicts of interest."

But shadow cabinet office minister Rachel Reeves told Parliament that it had been "an unedifying gold rush of chums and chancers".

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