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Government handling of COVID-19 testing contracts criticised

Author: ICAEW Insights

Published: 30 Mar 2022

NAO says the procurement process for awarding Randox Laboratories the contracts was “inadequate”.

The government handed COVID-19 testing contracts worth £463.5m to Randox Laboratories “without any competition”, says the National Audit Office (NAO), the UK’s public spending watchdog, calling the process “inadequate”.

Between January 2020 and December 2021, the Department of Health and Social Care and Public Health England awarded 22 contracts to Randox Laboratories, or its strategic partner Qnostics, with a maximum value of £776.9m.

The majority (60%), totalling £463.5m of the contracts, were awarded without any competitive procurement process. By 18 October 2021, the Department had paid Randox £407.4m on its testing contracts.

The NAO says ministers failed to provide “key evidence we would expect to see to support its decision-making on the first contract”.

Its report lists a litany of failures in transparency, due diligence and governance standards. The watchdog says that ministers failed to carry out a price benchmarking exercise and establish key performance measures or any information on supplier profit margins.

“The Department gave us incomplete or no documentation on other significant aspects of the procurement, including detailed due diligence, detailed contractual negotiations leading to the first contract award, and consideration of potential conflicts of interest,” says the NAO. Ministers also did not disclose Randox’s attendance at four ministerial meetings “as it should have done in line with transparency requirements”.

The government failed to publish details of contracts awarded to Randox during the pandemic within its target of 30 days. It published the details of most contracts awarded to Randox during the early months of the pandemic within 49 days of Randox’s first testing contract for £132.4m and 55 days for the subsequent £328.3m variation.

Alison Ring, Director, Public Sector and Taxation at ICAEW, says: “There was a necessity for the government to act quickly, but key procurement decisions were not fully documented as they should have been.”

The NAO acknowledged that the government had to move quickly during the early days of the pandemic, but it criticised ministers for not documenting key decisions adequately, disclosing ministerial meetings with Randox fully or keeping full records of ministerial discussions involving Randox.

Ring says: “This lack of audit trail can unfortunately lead to a perception of opaqueness over the tendering process, where what is always needed is full transparency when such vast sums of public money are involved.”

The watchdog recommends that “even when emergency procurement is necessary and the priority is speed of action, an adequate audit trail is maintained to ensure transparency, accountability and robust decision-making”.

Prior to the COVID-19 outbreak in March 2020, Randox had been on several NHS framework agreements for diagnostic goods and services, but it had only been awarded contracts typically worth less than £100,000.

During the early days of the pandemic, the then MP for North Shropshire, Owen Paterson, who was also a paid consultant to Randox, sent WhatsApp messages to the then Secretary of State Matt Hancock asking him to chase the matter – despite the Chief Medical Officer’s office having previously replied saying that Randox’s proposal did not have “enough information at that time to make an initial assessment on Randox’s specific proposal”.

NAO Comptroller and Auditor General Gareth Davies says: “Even taking these exceptional circumstances into account, the documentation of the decision-making process for such large contracts was inadequate.

“Our previous reports on COVID-19-related procurement and those of Nigel Boardman have recommended improvements to ensure an adequate audit trail is maintained even when the priority is speed of action. Government has already started to implement some of these improvements, and we will follow up progress.”

Ring also urged the government to ensure that measures were in place for a simplified competitive tendering process should such an emergency arise again.

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