Source · Select Committees · Public Accounts Committee
Recommendation 13
13
We recognise that given the circumstances the Department had to move quickly.
Conclusion
We recognise that given the circumstances the Department had to move quickly. However, regardless of the circumstances, government regulations require departments to carry out due diligence on the organisations that they buy from and exclude organisations that do not comply with various environmental, social and labour laws”.20 The Department told us that it did its best to confirm that ventilators were the correct specification and that sellers were credible—this included looking into suppliers’ financial records, any investigations they had been part of, and anything published about them. When asked specifically whether it had, for example, looked into the issue of modern slavery in its supply chains, the Department said that it was not aware of any links to modern slavery as far as the manufacturers of the devices were concerned. However, it acknowledged that it had not looked at exactly where every component in the machine was produced at the time. The Department agreed to check back through its wider supply chains as far as it could to establish whether any links to modern slavery existed. It cautioned that certain aspects of the supply chain may be difficult to investigate.21 The Department wrote to us one month after the oral evidence session, having considered the matter further. It stated that it and the British Embassy in Beijing had worked closely with external due diligence service providers, to carry out open source checks on Chinese suppliers of ventilators procured during the peak of the pandemic, It said that this due diligence included public records and media checks designed to flag legal, political or reputational risks, including on modern slavery, and assured us that procurement processes were all in line with UK 17 Qq 50–51; C&AG’s Report, paras 3.2, 3.3 18 C&AG’s Report, para 3.10 & Figure 4 19 Qq 66,79 20 The Public Contracts Regulations 2015, sub section 7 21 Qq 71, 74–75 Covid-19: Supply of ventilators 13 procurement regulations during this
Government Response
Not Addressed
HM Government
Not Addressed
3: PAC conclusion: Despite having to operate at speed, the Department of Health and Social Care still had a duty to carry out full due diligence for all parts of the supply chain. 3a: PAC recommendation: The Department of Health & Social Care should set out in its Treasury Minute response its view of the risk resulting from the speed of its due diligence on its purchase of ventilators and how it is ensuring that its due diligence procedures for future procurements cover the full supply chain during emergency procurement. This should include how it will minimise the risk of contributing to modern slavery and meet other legal requirements. 3.1 The government agrees with this recommendation. Recommendation implemented 3.2 The majority of devices purchased during this period were through framework agreements where NHS standard procurement processes had been followed. These include usual full due diligence checks. 3.3 Where devices were purchased outside these normal framework agreements, due diligence on suppliers was undertaken along with colleagues from FCO (now FCDO). This included commissioning rapid risk reports on potential new suppliers through specialist third party organizations. However, given the extreme urgency and exceptional circumstances, it is inevitable that the ability to conduct thorough due diligence checks were more limited during March and April 2020 than normal. 3.4 The checks that we undertook were appropriate to the circumstances faced and uncovered no material concerns relating to organizations that the department contracted with. 3.5 The government is confident that the increased capacity purchased already, and improved horizon scanning arrangements that we have now put in place (as set out in the answers to 1 and 2 above) will significantly reduce the need to rely on rapidly purchasing equipment outside of normal procurement processes in future. The department takes all allegations of modern slavery very seriously and is committed to ensuring all suppliers follow the highest legal and ethical standards, fully understand their supply chains and operate responsibly.