A devastating report today lifts the lid on the cronyism and ineptitude that has characterised the Government’s £18billion rush to source PPE and other equipment during the coronavirus crisis.
The National Audit Office revealed that officials had signed contracts for hundreds of thousands of facemasks which turned out to be unusable – wasting hundreds of millions of pounds.
The National Audit Office report found more than 1,300 contracts worth £10.5billion were awarded by the Government with no competition whatsoever
The bombshell report found:
- Two of the companies named in the report have links to the Prime Minister’s former chief adviser;
- More than 1,300 contracts worth £10.5billion were awarded by the Government with no competition whatsoever – increasing the chance of money being wasted;
- Ministers set up a separate VIP procurement route which allowed some companies to be fast-tracked for a decision – as long as they had the right connections;
- One in ten suppliers processed through this high-priority lane (47 out of 493) obtained contracts compared with less than one in 100 suppliers that came through the ordinary lane (104 out of 14,892).
Rachel Reeves, Labour’s Cabinet Office spokesman, said: ‘The country deserves to have confidence their money is being spent effectively by the Government – and to know without doubt that friends and donors to the Conservative Party aren’t profiting from this pandemic.’
The NAO’s report looked at 8,600 contracts awarded by the Government between January and July.
These were worth £18billion, of which £17.3billion were new contracts rather than contract extensions. Most of the money, £12.3billion, went on PPE, with the remainder going on other equipment and virus testing.
Ministers, MPs and civil servants could refer businesses to a ‘high-priority’ lane and firms which were granted this VIP access were more than ten times as likely to be awarded a contract as those in the ordinary lane.
Leads came into a dedicated mailbox, but officials only recorded the sources in half of cases, although many were from ministerial offices following tip-offs from MPs about firms in their constituencies.
The NAO highlighted one £840,000 contract with Public First for focus groups and communications.
Dominic Cummings was drawn into the debacle after the spending watchdog said officials failed to consider potential conflicts of interests
The policy and research firm is owned by James Frayne and his wife Rachel Wolf, both of whom have previously worked for Michael Gove, the minister for the Cabinet Office. Miss Wolf co-wrote Boris Johnson’s 2019 manifesto.
The NAO said there was no evidence Mr Gove had been involved in the award, but ‘we found no documentation on the consideration of conflicts of interest’.
Mr Cummings’s association with Mr Frayne dates back to at least 2000, when they worked together on a campaign against Britain joining the euro. They also co-founded a Right-wing think tank.
The report discussed another potential conflict of interest in reference to Lord Agnew, a minister in the Treasury and the Cabinet Office.
He owned shares in Faculty, an artificial intelligence firm given three coronavirus contracts worth £3million for data analysis.
Faculty is also linked to Mr Cummings. It worked with him on the Vote Leave campaign in 2016, and The Guardian reported that he donated £260,000 to the firm from his company Dynamic Maps in 2018 and 2019.
A Faculty spokesman said: ‘The NAO found no evidence that Lord Agnew was involved in these procurements, which were contracted under delegated authority in different departments, none of them his own.
The National Audit Office said there was no evidence Mr Gove had been involved in the award
‘It also found that the minister had disclosed his interests. Lord Agnew retains ownership of his shares through a blind trust.’
The report did not mention Mr Cummings’s connection to either Public First or Faculty. Mr Frayne, of Public First, said: ‘We agreed a pay-as-you-go deal where we could be terminated at any point if they weren’t happy with our work.’
A government source said Mr Gove had no involvement with the Public First contract.
Cabinet Office minister Julia Lopez, said: ‘We have robust processes 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.’
Mr Cummings did not reply to a request for a comment.
Dominic Cummings has links with two of the four companies picked out in the National Audit Office’s damning report.
The former chief adviser to the Prime Minister, 48, has connections to artificial intelligence firm Faculty and research company Public First, which have secured contracts worth more than £3.8million.
Mr Cummings was not named in the public watchdog’s devastating report, which found that bidders with ‘VIP access’ to ministers were ten times more likely to win Covid contracts than those who did not.
Mr Cummings worked with Faculty – which was awarded three contracts worth £3million for data analysis – on the Vote Leave campaign in 2016.
Dominic Cummings has connections to artificial intelligence firm Faculty and research company Public First
He also has long-standing links to Public First, run by James Frayne and his wife Rachel Wolf, who co-wrote the Conservative Party’s 2019 manifesto.
His association with Mr Frayne dates back to at least 2000, when they worked on a campaign against Britain joining the euro.
The NAO report criticised the fact that the £840,000 Public First contract was awarded retrospectively. The report states that Public First invoiced for £550,000 in total for work covered by the contract.
It identified that the company’s founders have also worked for Michael Gove, the Cabinet Office minister. The report said there was no evidence that Mr Gove had been involved in the awarding of the contract, but added that it ‘found no documentation on the consideration of conflicts of interest’.
There is no evidence to suggest that Mr Cummings played any role in either firm securing the contracts.
Another company scrutinised in the report is Ayanda Capital, which was handed a £253million contract to supply PPE.
The deal was brokered by Andrew Mills, who was one of 12 advisers to the Board of Trade, chaired by International Trade Secretary Liz Truss. Mr Mills is also a ‘senior board adviser’ to Ayanda Capital.
Some 50million masks, worth £155million, delivered by the company were of the wrong specification and cannot be used.
Ayanda said last night: ‘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.’
On top of the three companies identified in the NAO report, the Mail can reveal 12 more included in the graphic above. They include Meller Designs, which secured £163million in PPE contracts. It is run by Tory donor David Meller.
P14 Medical Limited was awarded three contracts worth £272million to supply PPE. Its director is former Tory councillor Steve Dechan.
Pictured: The Spanish middleman who was paid £21MILLION of taxpayers’ cash to set up PPE deal between the NHS and Florida-based jewellery designer
A Spanish businessman who served as a middleman to secure PPE for the NHS has been paid an astonishing £21million in UK taxpayers’ cash.
The consultant had been in line for another £15million of public funding, US court documents show.
Gabriel Gonzalez Andersson, from Madrid, was drafted in to help with ‘procurement, logistics, product sourcing and quality control’ of the life-saving equipment.
The court documents described him as having done ‘very well under this arrangement’ – at one point being in line for more than £35million.
Gabriel Gonzalez Andersson (pictured) from Madrid, found manufacturers who could quickly provide millions of items of PPE for deals already agreed for Mr Saiger
Florida-based jewellery designer Michael Saiger (pictured with Rachael Russell) set up a PPE business during the coronavirus crisis and the middleman he used was handed £21million of taxpayers’ cash
He was working for Florida-based jewellery designer Michael Saiger, 31, who set up a business providing protective garments to governments across the world earlier this year.
Mr Saiger claimed his previous encounters with factories in China left him well-equipped to fulfil orders. As such, UK ministers handed his firm ‘a number of lucrative contracts’ worth £200million providing gloves and gowns to NHS staff.
Jewellery designer Michael Saiger set up a PPE business during the covid crisis – and a middleman he used was handed £21million of taxpayers’ cash
Mr Andersson’s job was to find manufacturers who could quickly provide millions of items of PPE for deals already agreed for Mr Saiger.
And the Spaniard was paid more than $28million (£21million) for work on two NHS contracts, before his boss signed three more agreements in June. But their relationship later broke down, leading to a court fight in Miami in which the eye-watering sums involved have been laid bare.
Mr Saiger is now suing Mr Andersson for breach of contract and fraud in the inducement.
He accuses Mr Andersson of ‘failing to perform any and all of his duties’ for the three more recent deals. After fulfilling the contract, Mr Andersson would have been eligible for another $20million (£15million) in fees.
But the court documents state Mr Andersson ‘failed or refused to discharge contractual responsibilities’ to Mr Saiger – and should not receive a penny more. This is contested by Mr Andersson, the defendant, who feels he is entitled to the money.
The documents read: ‘Mr Andersson has not engaged in the procurement, logistics, product sourcing and quality control of the PPE equipment at the centre of each of the Agreements, as promised, and thus has breached each of the Agreements.’
His alleged departure left Mr Saiger’s firm ‘scrambling’ to fulfil contracts and a delay in delivering PPE to frontline workers.
The dispute has given an insight into the amount of money some companies have made supplying the NHS with protective gear.
The Department of Health and Social Care recently published more than £200million of contracts with Mr Saiger’s company – Saiger LLC. All the contracts awarded to the jewellery designer were awarded without being open to bidding by competitors thanks to an EU rule allowing rapid procurement during emergencies.
The largest deal totalled £103.1million. The three deals signed in June, which Mr Saiger accuses Mr Andersson of reneging on, focused on the procurement of ‘Titan gloves’, ‘Blue Sail gloves’ and ‘PureMed gowns’.
Concern has been raised around rushed Government PPE contracts. Spending a budget of £13.8billion, it has given contracts to thousands of firms. Others to receive big contracts include a six-week-old company, a small luxury packaging firm and a business based in an offshore tax haven.
The deals are set to face a legal challenge in UK courts by campaigners The Good Law Project.The group, which claims to ‘use the law to protect the interests of the public’, accuses ministers of not paying ‘sufficient regard’ to taxpayers’ money.
‘We do not understand why, as late as June, the Government was still making direct awards of contracts sufficiently lucrative as to enable these sorts of profits to be made,’ a spokesman said. ‘The real criticism that is to be made here is of the huge profits that government allows to be generated.’
Before providing lifesaving equipment to the NHS, Michael Andrew Saiger was known as the owner and founder of fashion accessory brand Miansai. The brand offers ‘something any guy could wear’.
The contracts came at the time where the NHS feared it would run out of lifesaving clothing such as masks and gowns
A spokesman for Mr Saiger said: ‘Our CEO has 15 years’ specialist experience in the production and distribution of high-quality goods sourced at best value from reputable factories in Asia.
‘We have an extensive network of manufacturing and distribution contacts in Asia and we are an agile, nimble firm able to move rapidly.
‘These attributes mean that few other suppliers can match us on speed, quality or value to the taxpayer, and we have used this combination to great effect for the benefit of the UK.
‘At the height of the pandemic, and at a time when the NHS was in need of high-quality PPE that met the required safety standards, we delivered for Britain, on time and at value.
‘We are exceptionally proud to have played our part in providing frontline workers in the UK, including nurses, doctors and hospital staff, with the millions of pieces of PPE they need to stay safe and to save lives.
‘At no time have we ever used any ‘middlemen’. We have few full-time staff so for large projects we bring in short-term contractors for additional expertise and capacity, allowing us to deliver what is needed.’
A Department of Health spokesman said: ‘We have been working tirelessly to deliver PPE, delivering more than 4.9billion items to the frontline so far.
‘Almost 32billion items have been ordered to provide a continuous supply, which will meet the future needs of health and social care staff.
‘Proper due diligence is carried out for all government contracts and we take these checks extremely seriously.’
Mr Andersson has been approached for comment.
A cynical & brazen cronyism: As new report reveals £18bn coronavirus PPE farce, DAVID ROSE argues this is not how public procurement in Britain is meant to work
By David Rose for The Daily Mail
The mismanagement, the incompetence, the reckless waste – all of this is shocking. But worse, perhaps, is the brazen cronyism involved.
The National Audit Office report on Personal Protective Equipment procurement is a searing indictment of this Government’s incompetence.
Yes, there was an unprecedented crisis. As the virus rampaged through hospitals and care homes, there was a desperate shortage of PPE.
Understandably, the Government made a dramatic appeal to suppliers – please get in touch, we need you.
The Government made a dramatic appeal to suppliers of Personal Protective Equipment at the start of the pandemic
Personal protective equipment arrives from Tianjin, China , at Bournemouth International Airport on May 10
But it awarded PPE contracts worth billions to companies not on the basis of quality or price, but in many cases – according to today’s damning report – on which firms had the best personal contacts in Westminster and Whitehall.
This isn’t how public procurement in Britain is meant to work. Strict, legally binding rules are supposed to enforce fairness and transparency, promote competitive pricing and to prevent conflicts of interest.
But thanks to the pandemic, the report suggests, the rules were cast aside – and replaced in many cases by the old pals act.
The report confirms what this newspaper revealed two weeks ago, that well-connected firms and individuals could be put on a ‘VIP’ route – officially called a ‘high-priority lane’ – meaning decisions on their potential contracts were fast-tracked.
Once recommended, these firms were more than ten times as likely to win contracts.
As the virus rampaged through hospitals and care homes, there was a desperate shortage of PPE
The result is we have been landed with equipment that has often turned out to be useless, and with bills that are far higher than they should have been.
At the same time, those with real expertise and the ability to procure quality products at a good price have been sidelined.
Take Jonathon Bennett. As the Mail reported this month, he is a veteran textile importer with extensive contacts in China, where most PPE is made. His bid to supply millions of masks in April was highly competitive – well below the Government’s ‘benchmark’ price.
But the £253million contract went to Ayanda Capital, a firm with no experience which was charging almost twice as much. Worse, 50 million of their masks were of the wrong design.
Mr Bennett has long suspected Ayanda won its contract because it was brokered by someone who until recently had been an adviser to Trade Secretary Liz Truss – an Ayanda associate called Andrew Mills.
Each time the Department of Health is asked how these contracts were awarded, it says the same thing – that it always exercises strict ‘due diligence’
The NAO report confirms this. It was thanks to a ‘referral’ by Mr Mills that Ayanda’s bid got the VIP treatment.
Ayanda is far from the only company that benefited from fast-tracking and went on to produce unusable PPE.
Each time the Department of Health is asked how these contracts were awarded, it says the same thing – that it always exercises strict ‘due diligence’.
Yet the NAO report reveals that when department officials carried out ‘due diligence’ on Ayanda, they somehow failed to notice Mr Mills’s involvement.
So what were the criteria that determined who got VIP status? Amazingly, the NAO finds there were none, while ‘the source of the referral’ for this treatment ‘was not always recorded’.
In the Middle East, there is a term for this way of doing business: ‘Wasta’. It means exploiting the access and influence someone has.
Could this system really now be a feature of public policy in Britain? There are growing concerns over the allocation of up to £42billion on Operation Moonshot mass virus testing.
Insiders told me told me there has been a VIP channel in this process, too. Just how many more contracts will NAO investigators now find cause for serious concern over?