The government has paid out enormous sums of money to companies without an open bidding process.
The government has paid out enormous sums of money to companies without an open bidding process.

The government has come under fire from the National Audit Office for a lack of transparency and potential conflicts of interest over the awarding of emergency Covid contracts. There is huge public concern about the nature of contracts handed out to businesses with links to the Conservative Party, with newspapers calling the system a “chumocracy”.

By 31 July 2020, over 8,600 contracts related to government’s response to the pandemic had been awarded, with a value of £18 billion. Under emergency Covid-19 regulations, these contracts could be awarded without the competitive tendering process that is normally required.

At the same time, the government established a high-priority lane to assess and process potential leads for PPE from government officials, ministers’ offices, MPs and members of the House of Lords. This high-priority lane sat alongside a normal lane established to assess and process other offers of PPE support. About one in ten suppliers processed through the high-priority lane (47 out of 493) obtained contracts compared to less than one in a hundred suppliers that came through the ordinary lane (104 of 14,892).

The NAO has reported that this system led to “potential conflicts of interest involving ministers” and identified several cases were government ministers or advisers had connections to companies that were awarded contracts.

For example, On 5 June 2020, the Cabinet Office awarded a contract for a maximum £840,000 to Public First, which is owned by the husband-and-wife team of James Frayne and Rachel Wolf. Frayne is a long-term political associate of Dominic Cummings, while Wolf is a former adviser to Michael Gove and co-wrote the Conservative party manifesto for the 2019 General Election. Despite these links, the NAO “found a lack of documentation recording the process for choosing the supplier, the justification for using emergency procurement, or any considerations around potential conflicts of interest”.

Another firm, Randox Laboratories, was handed a £133 million contract to produce and process testing kits. Owen Patterson MP sits on the company’s board and is paid £100,000 a year to act as an advisor. The company is responsible for 25% of tests across the UK, but analysis by the Sunday Times suggests that fewer than 10% of tests results have been delivered on time. The company also recalled up to 750,000 kits over concerns about effectiveness in August.

In addition, the government paid almost £500 million to companies with no history of providing medical supplies to procure PPE. This includes a £108 million contract to Pestfix – a pest control company with just 16 staff members – and for £252.5m to the investment firm Ayanda Capital for masks which did not meet the required specification and could not be used.

NAO found that a number of contracts had not been published in a “timely manner”, which made it impossible to judge whether public money was being spent appropriately and “diminished public transparency”.

The public have been understandably alarmed and angry to learn that the government has paid out enormous sums of money to companies with direct personal connections to Ministers, backbench MPs and Tory donors, without an open bidding process.

There is a huge amount of expertise in our public services and local authorities, which could play a vital role in our response to coronavirus – from contact tracing, to setting up PPE supply chains and getting it to the frontline.

Instead, the government has outsourced essential services to their mates, political supporters and private companies with track records of failure. The Tories cannot be trusted with public money.

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