Management of PPE Contracts
Closed
What the inquiry looked at
“The NAO and PAC have previously reported on the commercial deals struck by government as part of its emergency response to the COVID-19 pandemic, finding in some instances that these deals may have left government with some that failed to meet the required standards, including hundreds of millions of pounds-worth of PPE that will not be used for the original intended purposes. The Committee will question senior officials at DHSC on the way government is managing its COVID-19 contracts and the goods it has received to date , including the actions taken by government if the goods have not been received, are not what was expected, or are no longer required. If you have evidence on these issues please submit it here by 6pm on Wednesday 13 April 2022.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
Two years after purchasing just over £13 billion’s worth of PPE the Department of Health & Social Care (the Department) remains in dispute with many suppliers over the quality of the PPE they provided. It faces a huge challenge to manage a stockpile of PPE, including billions of items that are unusable or not needed. Of the 37.9 billion items of PPE purchased, the Department has estimated that it holds 3.9 billion items that it does not need. It is exploring options for selling, donating and recycling this PPE but it accepts that some will end up being incinerated. The Department is hampered in its overall management of its PPE stock as is does not have a fully integrated stock management system and because it still holds PPE in over 70 locations across the UK as well as in China and at various supplier storage locations.
The Department is in dispute with PPE suppliers on 176 contracts with up to £2.7 billion of taxpayers’ money at risk. The majority of these disputes relate to the quality of the PPE provided. Progress in resolving these disputes has been slow with 86 of the 176 still at the very first stage of the commercial resolution process with an estimated 35% that will not be resolved by 2023. There is also little sign of action against potentially fraudulent suppliers despite the Department’s estimate that as much as 5% of PPE expenditure may have involved fraud. Insufficient due diligence checks prior to letting some contracts has left the Department unable to prevent or take action where suppliers and intermediaries may have made excessive profits whilst providing substandard PPE.
The future of the PPE programme remains uncertain. In April 2022 Supply Chain Coordination Limited (SCCL) took over responsibility for the programme, however it is unclear how exactly responsibilities and roles are split between itself and the Department, and the already delayed PPE strategy paper is still to emerge. That strategy will, amongst other things, need to set out how the Department expects to maintain resilience in the UK supply chain by working with the UK suppliers who helped meet demand during the pandemic as well as where responsibility lies for getting best value for taxpayers from the contracts it is still disputing.
What the government said
The government responded on 8 November 2022. The deadline was 20 September 2022.
The government states that it agrees with the Committee's recommendations on PPE contract management, marking several as implemented and giving target dates for others.
- On excess stock, the department retains responsibility and "expects the operational responsibility will transfer to the NHS Supply Chain on 1 April 2023". Its "current working assumption" is that, "subject to suitability", excess products will be transferred to a future stockpile.
- On stock management, it agrees but says "a new stock management system would not add to the existing processes". It cites a data improvement programme and an expected handover of stock management to SCCL.
- On disputed contracts, it says a Dissolution Team has been commissioned until March 2023 with quarterly targets. It will provide a summary update to the Committee in confidence because much of the information is "commercially sensitive".
- On the PPE strategy, it says it is "committed to publishing the Strategy as soon as it is possible" and will update the Committee on publication plans "in due course".
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 15 March 2022 to 12 January 2023. The dashed mark is the deadline Parliament records for the government's response.
- Oral evidence 20 Apr 2022
- Report 20 Jul 2022
- Government response 8 Nov 2022
- Correspondence 3 letters
What it recommended 15 recommendations · 6 conclusions
2The Department still lacks a stock management system that enables it to fully understand what...
3The Department remains in dispute on 176 contracts for PPE with £2.7 billion of taxpayer...
4The Department had insufficient due diligence checks at the outset of the pandemic to prevent...
5The Department has handed back responsibility for the PPE programme to Supply Chain Coordination Limited...
6The future of the UK-based supply chain for PPE is unclear.
1On the basis of a Report by the Comptroller and Auditor General, we took evidence...
7Alongside reducing excess stock, the Department is also having to consider what is an appropriate...
8The Department told us that it has now received nearly all of the 37.9 billion...
9We asked what assurances the Department could give us about the accuracy of its stock...
10We asked the Department, given this wide spread of PPE storage, what steps it is...
11The Department acknowledges that it still has many PPE contracts that have ongoing contractual issues...
12The NAO reported that of the 176 contracts in dispute, most of these were still...
13We asked the Department what its assessment of fraud was amongst these contractual disputes.
14We wanted to understand the Department’s view of profits made by PPE suppliers and intermediaries,...
15The Department told us that factoring in consideration of profit margins before these PPE contracts...
16One due diligence check that did not appear to be applied was a consideration of...
17Prior to the pandemic, the role of procuring and managing PPE was largely the responsibility...
18We asked the Department how the transfer back to SCCL had gone and it was...
19The Department will still have a role to play in the PPE programme despite this...
20Prior to the COVID-19 pandemic there were not many businesses in the UK that specialised...
21The Department set out in its initial PPE strategy its desire to build on this...
Evidence
Oral evidence sessions 1
- 20 Apr 2022Management of PPE Contracts3 witnesses, listed belowparliament.uk ↗
Who gave evidence 3 witnesses
- Jonathan MarronDirector General for Primary Care and Prevention, Department for Health and Social Care
- Shona DunnSecond Permanent Secretary, Home Office
- Sir Chris WormaldPermanent Secretary, Department of Health and Social Care
Correspondence 3 letters
- 12 Jan 2023Correspondence from Sir Chris Wormald, Permanent Secretary, Department of Health & Social Care, re 12 report of session 2022-23 management of PPE contracts, dated 21 December 2022
- 12 Jan 2023Correspondence from Will Quince MP, Minister of State for Health and Secondary Care, Department for Health and Social Care, re update on Government Personal Protective Equipment (PPE) contracts, dated 19 December 2022
- 24 May 2022Correspondence from Sir Chris Wormald, Permanent Secretary, Department of Health and Social Care, re Management of PPE Contracts, dated 19 May 2022