Recommendation 4

The Department had insufficient due diligence checks at the outset of the pandemic to prevent potential profiteering and to identify conflicts of interest. We recognise that the Department had to act quickly at the start of the pandemic to secure vital supplies of PPE but believe that there was still scope to perform appropriate due diligence, particularly on potential new suppliers. The Department acknowledges that before May 2020 not all due diligence checks on areas such as financial, commercial and legal issues were completed before awarding contracts. A formalised eight-stage due diligence process was established in May 2020 but 46 out of 115 contracts awarded through the VIP lane pre-dated this. The Department believes that it had the necessary due diligence checks considering the circumstances and environment of the COVID-19 pandemic in which it was purchasing PPE. At no point was consideration given to the extent of the profit margin that potential suppliers would be taking on payments for PPE. Neither was consideration of any potential conflicts between individuals making referrals through the VIP lane and the companies they were referring. We are therefore unsurprised to see the reports of excessive profits and conflicts of interest on PPE contracts. Recommendation: The Department should set out in its Treasury Minute response how its commercial reset will ensure that sufficient processes are now in place to prevent such issues occurring again.