Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Accepted
Numerous PPE contracts faced dissatisfaction and breaches, leading to substantial cancellations and variations.
Conclusion
The Department continues to review the PPE contracts it entered into to identify suppliers that did not deliver against their contractual terms. By February 2022, the Department had negotiated the cancellation or variation of contracts to reduce the original supply of PPE by 1.21 billion items with an associated reduction in value of £572 million.15 There have been 60 contracts identified by the Department where there was dissatisfaction due to required standards, quality control or due to contractual breach. The value of these contracts is £1.77 billion. In addition, there were twelve contracts held by the Department’s subsidiary Supply Chain Coordination Ltd which were in dispute as at 31 December 2022, where suppliers were under investigation as they were in breach of their obligations.16 The Department confirmed that on resolution of the disputes the appropriate information will be released to the public.17 Stockpiling for a future emergency
Government Response Summary
The government states it is already providing regular quarterly updates on PPE inventory, disposals, and contract resolution activities, with SCCL managing the PPE supply chain and excess stock disposal, and the Contract Dissolution Team continuing to recover value from defaulting suppliers.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation Recommendation implemented 1.2 Since the pandemic, the Department of Health and Social Care has kept the Committee regularly updated on personal protection equipment (PPE) inventory controls, disposal activity and commercial resolution activity. Through the quarterly PPE updates, the department provides the Committee with updates specifically relating to PPE stock management; disposals and associated costs; running costs of PPE storage; and dissolution activities including legal proceedings. The most recent update was shared with the Committee in June 2023, with the next update due at the end of summer 2023. 1.3 In March 2023, the department also wrote to the Committee setting out the strategy for the future of PPE. This strategy sees Supply Chain Coordination Limited (SCCL) manage the PPE supply chain for business-as-usual distribution to health and care setting and responsibility for maintaining adequate inventory controls. SCCL ensures that inventory controls are in place across all warehouses and reports are produced on a periodic basis to inform future procurements and excess stock disposal plans. In addition, SCCL will continue to deliver the department’s plan to dispose of remaining excess PPE including by product recycling and energy production through waste processes. 1.4 As the Committee will be aware, the Contract Dissolution Team within the department remain committed to recovering maximum value from suppliers which have failed to deliver against their contractual terms. The department continues to investigate contracts where there is some degree of dissatisfaction and will continue to report to the Committee on this through the quarterly updates.