Source · Select Committees · Public Accounts Committee

Seventeenth Report - Government’s contracts with Randox Laboratories Ltd

Public Accounts Committee HC 28 Published 27 July 2022
Report Status
Government responded
Conclusions & Recommendations
23 items (12 recs)
Government Response
AI assessment · 20 of 23 classified
Accepted 18
Not Addressed 2
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Recommendations

12 results
2 Accepted

The Department failed to meet basic requirements to report publicly ministers’ meetings with external parties.

Recommendation
The Department failed to meet basic requirements to report publicly ministers’ meetings with external parties. The Ministerial Code requires all departments to report meetings that ministers have had with external parties and any hospitality received, in the interests of transparency … Read more
Government Response Summary
The Department has strengthened reporting and quality assurance processes, including PPS and ministerial clearance for each entry, and has updated the register of ministerial meetings.
HM Treasury
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4 Accepted

The award of the first Randox contract did not receive adequate scrutiny from senior officials...

Recommendation
The award of the first Randox contract did not receive adequate scrutiny from senior officials and the role of ministers in signing it off was unclear. The Department’s then Second Permanent Secretary had some visibility of the first contract awarded … Read more
Government Response Summary
The government published guidance for Ministerial involvement in commercial activity and the contracting process in July 2022, outlining the expected role and involvement of Ministers.
HM Treasury
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5 Accepted

The Department failed to hold Randox to account for its performance against its first contract...

Recommendation
The Department failed to hold Randox to account for its performance against its first contract and awarded it another £328 million extension without competition. The Department did not set out any key performance indicators for Randox in its first contract … Read more
Government Response Summary
The government agrees with the Committee’s recommendation and states that DHSC Commercial Policy outlines best practice methodology and processes which applies to all procurements and contracts, irrespective of the circumstances, and all contracts are subject to DHSC’s contract management operating standards.
HM Treasury
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6 Accepted

The Department did not do enough work to determine whether Randox was making excess profits...

Recommendation
The Department did not do enough work to determine whether Randox was making excess profits from its contracts with Randox. Randox’s published accounts do not yet cover the entire period of the contracts we considered, but they already show how … Read more
Government Response Summary
The Government Commercial Function has published the The Sourcing Playbook which sets out the key commercial principles that underpin commercial activity across Government and provides commercial, finance, project delivery, policy and other professionals with comprehensive guidelines, rules and principles that will help them to get more projects right from the start.
HM Treasury
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7 Accepted

The Department failed to record in its own published transparency releases that Randox had attended...

Recommendation
The Department failed to record in its own published transparency releases that Randox had attended four meetings on testing with ministers in 2020, although it did declare four other meetings involving ministers and Randox. Minutes or records of discussions were … Read more
Government Response Summary
The department has undertaken a review of historic ministerial diaries and updated the register where necessary, strengthened reporting and quality assurance processes, and reinforced transparency requirements across ministerial private offices.
HM Treasury
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9 Accepted

In addition to the wider efforts to improve basic documentation, the Department told us that...

Recommendation
In addition to the wider efforts to improve basic documentation, the Department told us that it had introduced measures such as spot checks by the principal private secretary to reinforce the importance of proper record-keeping in private offices. The Department … Read more
Government Response Summary
The department has written to the Committee on 31 October 2022 with the details requested by the Committee, regarding how its commercial refresh will bring record-keeping up to standard.
HM Treasury
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10 Accepted

Regulations governing public contracts require departments and other bodies to identify and manage conflicts of...

Recommendation
Regulations governing public contracts require departments and other bodies to identify and manage conflicts of interest in the procurement process. The Procurement Bill, published in May 2022, reinforces these requirements and would also explicitly require departments and bodies to prepare … Read more
Government Response Summary
The government recognizes that the experience of COVID-19 shows it could be better at ensuring consistency in the management of conflicts of interest, and it updated commercial guidance in May 2021. The department has completed its implementation of this PPN, having introduced a clear process to ensure that conflicts of interest are considered at appropriate stages of the procurement lifecycle, including a review of the declaration forms in line with the PPN.
HM Treasury
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11 Accepted

The Department did not appear to have considered potential concerns about Randox’s political connections in...

Recommendation
The Department did not appear to have considered potential concerns about Randox’s political connections in its decision making, such as Owen Paterson’s lobbying on behalf of Randox, hospitality offered to Matt Hancock by Randox’s managing director, or the company’s donations … Read more
Government Response Summary
The Department has written to the Committee on 31 October 2022 setting out its response regarding information on declared private interests and how it was used to identify potential conflicts of interest in its procurement decisions.
HM Treasury
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12 Accepted

Consideration of potential conflicts of interest is also relevant to other contracts with testing suppliers.

Recommendation
Consideration of potential conflicts of interest is also relevant to other contracts with testing suppliers. Some suppliers offering testing services were referred to the Department by ministers, MPs or Number 10. The Department marked supplier offers as ‘VIP’ if they … Read more
Government Response Summary
The government has strengthened its approach to ensure that conflicts of interest are not just documented, but also communicated and acted on by those awarding contracts, updating commercial guidance and introducing clear processes, and the Procurement Bill continues to place legal duties on contracting authorities.
HM Treasury
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15 Accepted

The Cabinet Office did not approve the first contract with Randox, as it would normally...

Recommendation
The Cabinet Office did not approve the first contract with Randox, as it would normally do for contracts worth over £10 million in line with its regime of commercial spending controls. The Department did not submit the Randox contract for … Read more
Government Response Summary
The department has written to the Committee on 31 October 2022 with the details requested by the Committee regarding when and how its commercial refresh will bring record-keeping up to standard.
HM Treasury
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16 Accepted

The Department did not include key performance indicators (KPIs) in its first contract with Randox...

Recommendation
The Department did not include key performance indicators (KPIs) in its first contract with Randox against which it could judge how the company was performing. The Department said the reason it had not set performance measures in the contract was … Read more
Government Response Summary
The government agrees with the Committee’s recommendation and states that DHSC Commercial Policy outlines best practice methodology and processes which applies to all procurements and contracts, irrespective of the circumstances, and all contracts are subject to DHSC’s contract management operating standards.
HM Treasury
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19 Accepted

Despite issues with the performance of the first contract, in October 2020 Randox was awarded...

Recommendation
Despite issues with the performance of the first contract, in October 2020 Randox was awarded a contract extension worth £328 million (around two and a half times the value of the original contract), again without competition. At the time, the … Read more
Government Response Summary
The DHSC outlines best practice methodology and processes which applies to all procurements and contracts, irrespective of the circumstances, including setting performance indicators and using these to hold providers to account via ongoing monitoring and reporting of KPIs.
HM Treasury
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Conclusions (11)

Observations and findings
3 Conclusion Accepted
The Department did not deal with potential conflicts of interest, despite clear concerns about Randox’s political connections. The Department did not show any evidence of taking any care over potential conflicts of interest when it awarded contracts to Randox. This was despite officials being aware of Owen Paterson’s contacts with …
Government Response Summary
The government agrees with the Committee’s recommendation. The department has written to the Committee on 31 October 2022 setting out its response as requested. Companies may be excluded from bidding for government contracts where a conflict cannot be effectively.
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1 Conclusion Not Addressed
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department of Health & Social Care (the Department) and the UK Health Security Agency (the Agency) about the government’s contracts with Randox Laboratories Ltd (Randox) during the COVID-19 pandemic.2 Government correspondence and other …
Government Response Summary
The government provides background information on the contracts awarded to Randox Laboratories Ltd during the COVID-19 pandemic but doesn't respond to any specific recommendation.
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8 Conclusion Accepted
The Ministerial Code further requires that hospitality received by ministers in a ministerial capacity is declared on departments’ quarterly transparency releases.14 During 8 Q 35, C&AG’s Report, para 13 9 Qq 85, 90–91, 122 10 C&AG’s Report, para 2.25 11 Cabinet Office, Ministerial Code, May 2022, para 8.14 12 Information …
Government Response Summary
The government agrees with the Committee’s recommendation to strengthen its transparency processes and ensure that it enforces requirements and takes action where they are not followed. They have undertaken a review of historic ministerial diaries and has, where necessary, updated the register, strengthened reporting and quality assurance processes, and minutes are taken for all meetings with external parties and are centrally held.
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13 Conclusion Accepted
The negotiation and approval processes for the first contract awarded to Randox in March 2020 were unclear and not fully documented.25 The Department said that standard processes were in place at the time for commercial specialists to negotiate contracts, which included checking accreditations for services and tests, considering supply chain …
Government Response Summary
The department has written to the Committee on 31 October 2022 with the details requested by the Committee, regarding details of when and how its commercial refresh will bring record-keeping up to standard and ensure that this is the case under all circumstances.
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14 Conclusion Accepted
The first contract did not receive the level of senior scrutiny and sign-off that we would expect for a contract of this size, particularly one awarded without competition. The contract was signed by a deputy director in the Department after officials received authorisation to proceed with the contract from Lord …
Government Response Summary
The Government Commercial Function published guidance for Ministerial involvement in commercial activity and the contracting process in July 2022, clarifying the role of ministers in procurement processes, including contract discussions and approvals.
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17 Conclusion
Randox asked for government help within weeks of being awarded its first contract to enable it to deliver its contracted level of tests. Randox needed access to specialist testing equipment held in universities and other laboratory facilities, which it and other suppliers received after ministers requested equipment loans on their …
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18 Conclusion Not Addressed
The first contract was originally intended to run for 12 weeks, ending in June 2020. However, Randox faced difficulties meeting the service levels specified in the contract. There were a number of reasons for this, including Randox taking longer than expected to increase capacity as well as lower than forecasted …
Government Response Summary
The response addresses a different conclusion/recommendation (conclusion #19) about holding Randox to account.
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20 Conclusion
For its first testing contract with Randox, the Department paid a price of £49.60 per single test. The contract price included the cost of supplying test kits, laboratory processing, transporting test kits and completed samples, and reporting of results. The Department could not provide details of contract negotiations prior to …
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21 Conclusion
The Department said that in relation to contract pricing, it did not consider the advantage to Randox that might be gained by the company winning early government contracts for testing (for example, from setting itself up as an established provider of testing services). The Department reiterated that the focus at …
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22 Conclusion Accepted
The Department did not monitor the profitability of Randox before deciding to award contracts to the company. The Department said that when contracts were awarded in 2020, it did not have the time or the ability to undertake this sort of monitoring.44 The latest accounts Randox has filed with Companies …
Government Response Summary
The Government Commercial Function has published the The Sourcing Playbook which sets out the key commercial principles that underpin commercial activity across Government and provides commercial, finance, project delivery, policy and other professionals with comprehensive guidelines, rules and principles that will help them to get more projects right from the start.
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23 Conclusion Accepted
Randox’s published accounts do not yet cover the entire period of the contracts we considered. Its accounts for the year to 30 June 2021 reflect how the company has already expanded as a result of increased business through the pandemic. At June 2021, 40 Qq 22, 49; C&AG’s report, para …
Government Response Summary
The Government Commercial Function has published the The Sourcing Playbook which sets out the key commercial principles that underpin commercial activity across Government and provides commercial, finance, project delivery, policy and other professionals with comprehensive guidelines, rules and principles that will help them to get more projects right from the start.
View Details →