Government Contracts: Covid-19 — [Yvonne Fovargue in the Chair]

Part of the debate – in Westminster Hall at 7:11 pm on 21st June 2021.

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Photo of Julia Lopez Julia Lopez Parliamentary Secretary (Cabinet Office), The Parliamentary Secretary, Cabinet Office 7:11 pm, 21st June 2021

It is a pleasure to serve under your chairmanship, Ms Fovargue. I thank all hon. Members who have taken part in this evening’s e-petition debate for their valuable contributions. I also thank the petitioners for initiating it. The public are absolutely right to demand that we spend money with care when we procure vital goods, services and works; I agree with Tonia Antoniazzi and others on that. I have always set out to be open about the challenges that the Government had to navigate at the height of the pandemic in procuring goods and services in the most urgent of situations. We were required to move at great speed and in an incredibly complex operating environment.

I was on maternity leave in the first half of 2020 as covid took hold, so I began my ministerial role only this time last year. My time in office in relation to procurement, therefore, has been spent not only going back to understand what happened during the early stages of the pandemic, particularly in relation to PPE, but on how we can improve our future response to urgent challenges. I want to assure hon. Members that a huge amount of work is either under way or already completed, which should reassure members of the public who would like an inquiry. I agree with Fleur Anderson that we do not want to wait to learn lessons.

The work includes an external, independent and unbiased review by the National Audit Office, two internal Cabinet Office reviews that have now been published, the commitment to a public inquiry into covid that starts next spring, and—of particular interest—a new procurement Bill that my ministerial colleague Lord Agnew and I are drafting, which will provide commercial teams with many more extensive options in a crisis between direct award, which raises understandable transparency concerns, and full-fat procurement, which takes far too long to turn around. The fastest turnaround under the dynamic purchasing system is six to eight weeks to contract award, and on an accelerated basis the very quickest possible process would be two weeks. But that would assume that all bid documentation was in place at the start, so it can be seen that in urgent situations this presents a real challenge.

On that first aspect of my work, I stood in Westminster Hall last year and shared a candid account of my findings for the House, particularly in relation to the procurement of PPE, a subject raised this evening by the hon. Members for Gower, for Hornsey and Wood Green (Catherine West) and for Jarrow (Kate Osborne). Those matters have been scrutinised by this House in many other forums. I will go over some of that context again because it is incredibly important to understand the actual challenges that were faced. I am afraid I cannot address all of the other items raised, particularly in relation to some of the education contracts, because I have not personally investigated those, but, as I described at that time, from conversations with officials, the Government had to work at pace in a very competitive international market to secure unprecedented volumes of essential supplies in order to protect frontline workers. That required a colossal upscaling effort.

Some 450 people from across Government were moved into the Department of Health and Social Care to become a stand-up virtual team to assist with securing PPE. That team is normally only 21 people strong. In many ways, this was a really impressive feat, with a hell of a lot of people who did not know each other working remotely on a range of different IT systems. We all assume that the Government are one entity, but Departments work in very different ways, often with different IT systems. It can be difficult to move people around the system and to make those systems compatible with each other. They were dealing with a product they were not familiar with in a very highly pressured market. That led to lags in contract publication, as paperwork has been very tricky to join up across systems. That issue was raised by Deidre Brock.

Facing exceptional levels of global demand, the usual vendors in China who service the NHS’s central procurement function very quickly ran out of supply, and the world descended on a few factories in that country to bid for available items. In that market context, the Government needed to procure with extreme urgency, often through direct award of contracts, or risk missing out on vital supplies. I pay tribute to officials for what they achieved, because it was quite remarkable in the circumstances. The Government never ripped up procurement rules. Regulation 32(2)(c) of the Public Contracts Regulations 2015, which predates the pandemic, explicitly allows for emergency procedures, including direct award. In a situation of genuine crisis and extreme urgency where offers had to be accepted or rejected in a matter of hours or days, it simply was not viable to run the usual procurement timescales, even by taking advantage of accelerated processes.

There was concern about the level of PPE that might be required to deal with covid. The Prime Minister put out a call to action, as many Members will recall. With huge commitment and energy, the British public and business responded. But that also meant that, in very short order, commercial teams were dealing with more than 15,000 offers of help. Frankly, leads were coming in much faster than they could be processed. When they were rejected, or if they were delayed, people started chasing through their MPs. To manage that influx of offers, a separate mailbox was set up to handle this area of work, and to sift credible offers.

The most important thing to note is that all PPE offers, no matter from where they came, went through the same eight-stage checks. The PPE team compared prices to those obtained in the previous two weeks, to benchmark the competitiveness of those offers. Separate approval and additional justification were required for any offers that were not within 25% of an average considered for possible approval. It is also important to note that of the 493 offers that came through that priority mailbox, I understand that only 47 were taken forward—in other words, 90% were rejected. My hon. Friend Adam Holloway highlighted the absurdity of some of the claims of impropriety being made.