A new National Audit Office report raises serious questions about the way the government has spent public money, writes Tom Sasse
A new National Audit Office report reveals that government departments have used procurement exemptions in questionable ways, offered fast track routes to suppliers with political connections, and failed to be transparent about their spending – all at a time when ministers already face accusations of patronage over appointments to key roles.
The unprecedented circumstances of the first phase of the coronavirus crisis justified some use of emergency procurement procedures, but that phase has now passed. To repair a growing reputation for handing out contracts and jobs unfairly, the government must clean up its act by following proper processes and improving transparency.
In the early months of the pandemic speed mattered above all else, particularly for securing Personal Protective Equipment (PPE). The government’s pandemic stockpile was insufficient and it faced a huge demand from frontline services at a time when global supply chains were seizing up and several countries implemented export bans.
The Cabinet Office was right, in such a situation, to issue guidance reminding departments and agencies of the circumstances in which they could bypass normal rules, including by directly awarding contracts, without running a competition. Speeding up processes may have saved lives.
The ‘circumstances’, however, were very specific: departments had to be able to show there were genuine reasons for extreme urgency, events were unforeseeable, and that it was impossible to comply with usual timescales.
The NAO report shows that rather than using exemptions only where necessary, departments have thrown normal procurement practices out the window. The auditor looked at £18bn worth of coronavirus contracts between January and July, mostly for PPE. Of that, £10.5bn was awarded without competition – some appears likely to have been awarded between May and June.
In March and April the speed and scale of the crisis was arguably ‘unforeseen’, but such extensive continued use of direct awards is hard to justify. The Cabinet Office guidance says departments need a clear audit trail explaining why they bypassed normal routes, but the NAO was often unable to find one.
And these process issues start to look far more problematic when set against the steady drip of stories about poor value for money and deals linked to Westminster connections. In August, the government spent £150m on PPE that proved unusable. In September, there were reports of departments directly awarding large consultancy contracts to PR firms associated with political contacts and allies, including Hanbury Strategy and Public First. Now the NAO reveal that the government set up a “high-priority lane” for suppliers offering PPE that came through the offices of ministers, MPs and Lords – and these suppliers were ten times more likely to win contracts.
The government insists these suppliers followed the same vetting process (though it has not explained the ten-fold variation in success rate). But the Cabinet Office proved unable to explain where many referrals came from – and given they were establishing a link between political connections and government coffers, ministers and officials should have been much more careful to ensure there was a clear process that was beyond reproach.
On top of this, the government failed to be transparent. The NAO looked at over 1000 contracts: the details about only a quarter were published on time (within the 90-day limit) and over half had still not been made public.
Rather than the unique demands of the crisis this points to a more fundamental disregard for rules and processes. A new Institute for Government report outlines ten priorities for Boris Johnson’s reset and argues that these questions over spending add to wider concerns raised about impropriety and patronage. These include a warning from Peter Riddell, Commissioner for Public Appointments, that ministers were stretching the rules with public appointments; while questions continue to be asked about Richard Desmond’s Westferry planning application, the Towns Fund and the report into allegations of bullying by the home secretary.
Boris Johnson should make good on his pledge at PMQs that all contract information will now be published promptly – and ministers should ensure proper rules, including running open competitions, are followed from now on, with direct awards used sparingly and only when justified.
Accounting officers should also see it as their role to challenge – and if necessary, seek directions – when their duties around securing value for money and protecting propriety are being threatened. Even if they are ignored, such important questions around the use of public funds must be brought into the open.
The prime minister should take the chance of the reset to clean up his government’s approach to procurement. A narrative is building of a government that wastes public money and hands out contracts to friends. If Johnson does not act quickly, it will be a difficult narrative to shake.