Source · Select Committees · Public Accounts Committee
Recommendation 16
16
One due diligence check that did not appear to be applied was a consideration of...
Conclusion
One due diligence check that did not appear to be applied was a consideration of potential conflicts of interest on PPE referrals. The Department confirmed that when signing off on these PPE contracts the accounting officer did not normally have any information about the source of the referral.47 It also said that this process was the same regardless of whether the referrals came through the VIP lane or not.48 The very nature 38 Q22 39 C&AG’s report, para 3.12 40 Q84 41 Qq84, 87 42 For example, The Guardian, 29 April 2022 43 Q29 44 Q28 45 Q73 46 C&AG’s Report, para 1.6 47 Q84 48 Q85 Management of PPE contracts 13 of the VIP lane, however, meant that potential conflicts of interest were inherently more likely for VIP lane referrals. Turning again to the example of PPE Medpro, we asked the Department what additional checks were conducted on this company given that the health minister had previously said that the Department was aware of a link between the initial referrer, Baroness Mone, and PPE Medpro. The Department refused to be drawn on the specifics of this case but again reiterated the argument that there would have been no difference in the level of checks conducted between any of the contracts awarded.49 49 Qq84–86 14 Management of PPE contracts 3 The future of the PPE programme SCCL’s role going forward
Government Response
Not Addressed
HM Government
Not Addressed
4: PAC conclusion: The Department had insufficient due diligence checks at the outset of the pandemic to prevent potential profiteering and to identify conflicts of interest. 4: PAC 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. 4.1 The government agrees with the Committee’s recommendation Recommendation implemented 4.2 In responding to COVID-19, government officials used legally compliant award procedures designed for use in emergencies. The department has well-established policies, processes and due diligence systems for use outside of emergencies. All tendering activities comply with the relevant standards, processes and criteria set out in the Public Contracts Regulations. 4.3 In May 2021 the Cabinet Office published Procurement Policy Notice (PPN) 04/2021, covering the issue of conflicts of interest in awarding contracts and interpretation of the relevant exclusion provisions where contractors commit certain breaches. The department has completed implementation of this PPN, having introduced a clear process ensuring that conflicts of interest are considered throughout the procurement lifecycle. 4.4 Where additional procurement activity may be needed to meet future pandemic requirements, it will be conducted in accordance with departmental policy developed specifically for emergency responses. New PPE procurement will be undertaken by category experts in SCCL. 4.5 As part of the Commercial Reset, the department has taken steps to improve governance and support to policy teams when spending public money, especially in an emergency situation. In addition, in May 2021 Government published The Sourcing Playbook, providing further enhanced guidance covering risk allocation, pricing approaches and assessing and monitoring the financial standing of suppliers to enable better understanding of cost-drivers and profit margins. 4.6 Further information, including the department’s commercial capability activity, is set out in a letter sent to the Committee in parallel to this Treasury Minute.