Friday, July 17, 2020
The scandal around government contracts
In the Guardian a few days ago, George Monbiot highlighted one of the many scandals of this lockdown, the awarding of contracts worth billions of pounds for equipment on which our lives depend, without competition or transparency. He argues that the government has 'has trampled on its own rules, operated secretly and made incomprehensible and – in some cases – highly questionable decisions.'
He outlines the details of this scandal:
Let’s begin with the latest case, unearthed by investigative journalists at the Guardian and openDemocracy. It involves a contract to test the effectiveness of the government’s coronavirus messaging, worth £840,000. It was issued by the Cabinet Office, which is run by Michael Gove. The deal appears to have been struck on 3 March, but the only written record in the public domain is a letter dated 5 June, retrospectively offering the contract that had already been granted. There was no advertisement for the work, and no competition. No official notice of the award has yet been published. The deal appears to have been done with a handshake and a slap on the back.
But we do know who the contract went to. It’s a company called Public First, owned by a married couple, James Frayne and Rachel Wolf. Since 2000, Frayne has worked on political campaigns with Dominic Cummings, Boris Johnson’s chief adviser. When Gove was education secretary, he brought both Cummings and Frayne into his department. Cummings was Gove’s chief political adviser, while Frayne was his director of communications. At roughly the same time, in 2010, Gove’s department awarded Wolf a £500,000 contract to promote his “free schools” obsession. Guess what? That didn’t go to competitive tender, either. Wolf co-wrote the Conservative party’s election manifesto in 2019.
In response to these latest revelations, the government claims it had to override the usual rules for public procurement because it was responding to an emergency. There are several problems with this claim. The first is that six weeks elapsed between the government’s first recognition that coronavirus presented a potentially serious public health risk and striking the deal with Public First. The second is that, of the four contracted services later listed on the government’s website, two were not for testing the government’s coronavirus messaging at all, but for “EU exit comms”: in other words, Brexit. The coronavirus work, according to this list, did not begin until 27 May. The Cabinet Office now claims that when it said “EU exit”, it meant coronavirus. This seems an odd mistake to make.
The third problem is that the government’s communications on the pandemic have been disastrous. Did it choose to ignore Public First’s “emergency” work, or was it of little value?
He goes on to outline another example:
But this, extraordinary as it is, is not the strangest of the cases the GLP is taking on. Another involves a pest control company in West Sussex called PestFix, which, according to the GLP, has listed net assets of only £18,000. On 13 April, again without public advertisement or competition, the government awarded PestFix a £32m contract to supply surgical gowns. PestFix is not a manufacturer, but an intermediary (its founder calls it a public health supply business): its role was to order the gowns from China. But, perhaps because of its lack of assets, the government had to give it a deposit worth 75% of the value of the contract. The government’s own rules state that prepayments should be made only “in extremely limited and exceptional circumstances”, and even then must be “capped at 25% of the value of the contract”.
If the government had to provide the money upfront, why didn’t it order the gowns itself? And why, of all possible outsourcers, did it choose PestFix? In the two weeks before it awarded this contract, it was approached by 16,000 companies offering to supply personal protective equipment (PPE). Some of them had a long track record in manufacturing or supplying PPE, and had stocks that could be deployed immediately.
Again, the government relies on the emergency defence to justify its decision. But it issued its initial guidance on preventing infection among health and care workers on 10 January. On 14 February, it published specific guidance on the use of PPE. So why did it wait until 13 April to strike its “emergency” deal with PestFix? Moreover, it appears to have set the company no deadline for the delivery of the gowns. Astonishingly, even today only half of them appear to have reached the UK, and all those are still sitting in a warehouse in Daventry. On the government’s own admission, “none of the isolation suits delivered so far has been supplied into the NHS”. So much for taking urgent action in response to the emergency.
Again, the contract is surrounded by secrecy. Crucial sections, such as the price paid for the gowns, have been redacted. Bizarrely, the award notice initially stated that the contract was worth £108m. But in responding to the lawsuit, the government now says the real value is £32m. Apparently, it struck “further contracts” with PestFix for other items of equipment. It has so far failed to reveal what these might be, or to publish the contracts. It is worth remembering that while all this was happening, frontline health and care workers were dying as a result of inadequate supplies of PPE.
There are plenty of other cases: such as the employment agency with net assets of £623 that was awarded an £18m government contract to supply face masks; the confectionery wholesaler that according to the GLP was given a £100m contract to supply PPE; and the £250m channelled through a “family office” registered in Mauritius, specialising in currency trading, offshore property and private equity, also to supply protective medical equipment. Altogether, billions of pounds’ worth of contracts appear to have been granted, often to surprising companies, without competition. I think we may reasonably ask what the hell is going on.
As Monbiot says, this is not just about value for money, important as that is, he concludes:
Transparent, competitive tendering is a crucial defence against cronyism and corruption. It is essential to integrity in public life and public trust in politics. But the government doesn’t seem to care.
In this he is absolutely right.
He outlines the details of this scandal:
Let’s begin with the latest case, unearthed by investigative journalists at the Guardian and openDemocracy. It involves a contract to test the effectiveness of the government’s coronavirus messaging, worth £840,000. It was issued by the Cabinet Office, which is run by Michael Gove. The deal appears to have been struck on 3 March, but the only written record in the public domain is a letter dated 5 June, retrospectively offering the contract that had already been granted. There was no advertisement for the work, and no competition. No official notice of the award has yet been published. The deal appears to have been done with a handshake and a slap on the back.
But we do know who the contract went to. It’s a company called Public First, owned by a married couple, James Frayne and Rachel Wolf. Since 2000, Frayne has worked on political campaigns with Dominic Cummings, Boris Johnson’s chief adviser. When Gove was education secretary, he brought both Cummings and Frayne into his department. Cummings was Gove’s chief political adviser, while Frayne was his director of communications. At roughly the same time, in 2010, Gove’s department awarded Wolf a £500,000 contract to promote his “free schools” obsession. Guess what? That didn’t go to competitive tender, either. Wolf co-wrote the Conservative party’s election manifesto in 2019.
In response to these latest revelations, the government claims it had to override the usual rules for public procurement because it was responding to an emergency. There are several problems with this claim. The first is that six weeks elapsed between the government’s first recognition that coronavirus presented a potentially serious public health risk and striking the deal with Public First. The second is that, of the four contracted services later listed on the government’s website, two were not for testing the government’s coronavirus messaging at all, but for “EU exit comms”: in other words, Brexit. The coronavirus work, according to this list, did not begin until 27 May. The Cabinet Office now claims that when it said “EU exit”, it meant coronavirus. This seems an odd mistake to make.
The third problem is that the government’s communications on the pandemic have been disastrous. Did it choose to ignore Public First’s “emergency” work, or was it of little value?
He goes on to outline another example:
But this, extraordinary as it is, is not the strangest of the cases the GLP is taking on. Another involves a pest control company in West Sussex called PestFix, which, according to the GLP, has listed net assets of only £18,000. On 13 April, again without public advertisement or competition, the government awarded PestFix a £32m contract to supply surgical gowns. PestFix is not a manufacturer, but an intermediary (its founder calls it a public health supply business): its role was to order the gowns from China. But, perhaps because of its lack of assets, the government had to give it a deposit worth 75% of the value of the contract. The government’s own rules state that prepayments should be made only “in extremely limited and exceptional circumstances”, and even then must be “capped at 25% of the value of the contract”.
If the government had to provide the money upfront, why didn’t it order the gowns itself? And why, of all possible outsourcers, did it choose PestFix? In the two weeks before it awarded this contract, it was approached by 16,000 companies offering to supply personal protective equipment (PPE). Some of them had a long track record in manufacturing or supplying PPE, and had stocks that could be deployed immediately.
Again, the government relies on the emergency defence to justify its decision. But it issued its initial guidance on preventing infection among health and care workers on 10 January. On 14 February, it published specific guidance on the use of PPE. So why did it wait until 13 April to strike its “emergency” deal with PestFix? Moreover, it appears to have set the company no deadline for the delivery of the gowns. Astonishingly, even today only half of them appear to have reached the UK, and all those are still sitting in a warehouse in Daventry. On the government’s own admission, “none of the isolation suits delivered so far has been supplied into the NHS”. So much for taking urgent action in response to the emergency.
Again, the contract is surrounded by secrecy. Crucial sections, such as the price paid for the gowns, have been redacted. Bizarrely, the award notice initially stated that the contract was worth £108m. But in responding to the lawsuit, the government now says the real value is £32m. Apparently, it struck “further contracts” with PestFix for other items of equipment. It has so far failed to reveal what these might be, or to publish the contracts. It is worth remembering that while all this was happening, frontline health and care workers were dying as a result of inadequate supplies of PPE.
There are plenty of other cases: such as the employment agency with net assets of £623 that was awarded an £18m government contract to supply face masks; the confectionery wholesaler that according to the GLP was given a £100m contract to supply PPE; and the £250m channelled through a “family office” registered in Mauritius, specialising in currency trading, offshore property and private equity, also to supply protective medical equipment. Altogether, billions of pounds’ worth of contracts appear to have been granted, often to surprising companies, without competition. I think we may reasonably ask what the hell is going on.
As Monbiot says, this is not just about value for money, important as that is, he concludes:
Transparent, competitive tendering is a crucial defence against cronyism and corruption. It is essential to integrity in public life and public trust in politics. But the government doesn’t seem to care.
In this he is absolutely right.
Comments:
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Jobs for the boys?
Syphoning off money to off shore accounts?
It reminds me of the plane.£900,000 when a 'paint job' could be done for £100,000.
75% ! 25%!? When it comes to selling these goods will some money find its way back into Govnt coffers or 'disappear?
Could the surplus money go to offshore artists for 'services rendered'?
There is a lot to be explained about these contracts.
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Syphoning off money to off shore accounts?
It reminds me of the plane.£900,000 when a 'paint job' could be done for £100,000.
75% ! 25%!? When it comes to selling these goods will some money find its way back into Govnt coffers or 'disappear?
Could the surplus money go to offshore artists for 'services rendered'?
There is a lot to be explained about these contracts.
<< Home
