Twelfth Report - Management of PPE contracts

The Department still lacks a stock management system that enables it to fully understand what PPE it has and where it is. The Department believes that it has now received nearly all of the 37.9 billion PPE items that it … Read more The Department still lacks a stock management system that enables it to fully understand what PPE it has and where it is. The Department believes that it has now received nearly all of the 37.9 billion PPE items that it has ordered, with 300 million items yet to be received. The management data on total stock numbers, however, has rarely been accurate. The Department blames inconsistencies between the volumes of PPE ordered and quantities shown in stock counts on the lack of a single end-to-end stock management system that captures all the stock it holds. This is exacerbated by the fact that the Department is still storing PPE in 70 locations across the UK, with items also held in China and also by suppliers. In order to make informed decisions about the appropriate amount of PPE to stockpile in future, the Department will need accurate and complete data on the stock it currently holds. Recommendation: The Department should set out in its Treasury Minute response to the Committee how it intends to work with SCCL to build and maintain an effective stock management system that is complete and accurate in its data collection. Show less

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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 … Read more 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. Show less

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The Department has handed back responsibility for the PPE programme to Supply Chain Coordination Limited (SCCL) with many issues still to be resolved. Since October 2021, oversight of SCCL transferred from the Department to NHS England and in April 2022 … Read more The Department has handed back responsibility for the PPE programme to Supply Chain Coordination Limited (SCCL) with many issues still to be resolved. Since October 2021, oversight of SCCL transferred from the Department to NHS England and in April 2022 the Department transferred the responsibility for managing the supply of PPE to SCCL. This means that responsibility for the logistical management and distribution of PPE across the 70 sites that the Department built up now resides with SCCL. In other areas, however, such as the resolution of the 176 contracts in commercial dispute, responsibility is to remain within the Department. The Department was due to produce a PPE strategy where we expect roles and responsibilities to be clearly set out, but this has been delayed and is now not expected to be completed until summer 2022. Recommendation: The Department should release its PPE strategy in full as soon as possible, setting out how it will work with SCCL and what the respective roles and responsibilities of each organisation will be in the ongoing management of contracts and future procurement activities. If the strategy is not available by the end of September, the Department should write to the Committee to explain the reason for the delay. Management of PPE contracts 7 Show less

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The future of the UK-based supply chain for PPE is unclear. The global demand for PPE at the start of the pandemic pushed up the prices from suppliers around the world. In an effort to create a more resilient UK-based … Read more The future of the UK-based supply chain for PPE is unclear. The global demand for PPE at the start of the pandemic pushed up the prices from suppliers around the world. In an effort to create a more resilient UK-based supply chain, the Department encouraged some UK manufacturers to repurpose their businesses to supply PPE. It signed 37 contracts under its “UK Make” programme and collectively, these contracts helped deliver 3.9 billion items of PPE. However, now that demand for PPE has reduced and with the Department holding a large amount of excess stock, it is unclear what role these suppliers might play going forward. Only seven of them have been moved onto SCCL’s procurement frameworks enabling them to bid for future PPE contracts. In the event of a future pandemic, it is unclear what role these suppliers might be expected to play to meet the renewed demand. Recommendation: The Department should explain in its Treasury Minute response what the role of UK based suppliers of PPE is expected to be going forward. This should include what role UK-based suppliers can expect to play in ongoing procurement activity and what the expectation is for capacity to be increased in the event of future pandemics. 8 Management of PPE contracts 1 The management of PPE stock Show less

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The Department remains in dispute on 176 contracts for PPE with £2.7 billion of taxpayer money at risk and has made little progress in tackling potential fraudulent supplies of goods. The majority of these 176 disputes relate to the quality of the PPE provided by the supplier. Eighty-three of the …

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On the basis of a Report by the Comptroller and Auditor General, we took evidence from the Department of Health & Social Care (the Department) about its management of Personal Protective Equipment (PPE) contracts let during the COVID-19 pandemic.1

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Alongside reducing excess stock, the Department is also having to consider what is an appropriate level of PPE to hold as a stockpile. We asked it whether it had created another strategic reserve of PPE in preparation for the possibility of a future pandemic.11 The Department noted that it had …

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The Department told us that it has now received nearly all of the 37.9 billion items of PPE which it ordered, with only 300 million items outstanding. It told us that whilst it has now opened every container it has received there are still 1.39 billion PPE items that have …

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We asked what assurances the Department could give us about the accuracy of its stock numbers. This was because the NAO reported that it could not fully reconcile the numbers from the stock model with individual contracts and said it was therefore unable to gain assurance over the accuracy of …

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We asked the Department, given this wide spread of PPE storage, what steps it is taking to introduce a modern stock management system for the PPE programme.23 We noted the importance of having a system where it knows exactly how much PPE it holds, where it is and what the …

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The Department acknowledges that it still has many PPE contracts that have ongoing contractual issues that need resolving. There are 176 contracts where there are concerns about either the quality or the performance of the contract and these are collectively worth £3.9 billion.27 The Department has assessed that of that …

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The NAO reported that of the 176 contracts in dispute, most of these were still in the early stages of being resolved. Eighty-three of the 176 contracts are still in the first stage of the commercial resolution process with a further 59 having entered formal commercial discussions. At present, no …

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We asked the Department what its assessment of fraud was amongst these contractual disputes. Although it conceded that some of the 176 contracts were of interest from a fraud perspective it was unwilling to give much information about any specific work it was undertaking beyond stating that it was working …

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We wanted to understand the Department’s view of profits made by PPE suppliers and intermediaries, particularly on contracts that have failed to deliver adequate PPE, many of which came through the VIP referral route. Reports continue to emerge of the vast profits that some individuals and companies made through supplying …

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The Department told us that factoring in consideration of profit margins before these PPE contracts were awarded was not possible. While it agreed that the best way to mitigate against excessive profiteering was to build such contingencies into the contract it argued that the reality of the global market at …

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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 …

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Prior to the pandemic, the role of procuring and managing PPE was largely the responsibility of Supply Chain Co-ordination Limited.50 In March 2020, when the Department realised that SCCL alone would not be able to procure the volume of PPE required, the Department took a more central role in PPE …

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We asked the Department how the transfer back to SCCL had gone and it was very positive about the process. It said that nothing had really been interrupted from a logistics perspective and that the reality is that the Department and SCCL had been working “hand in glove before the …

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The Department will still have a role to play in the PPE programme despite this transfer back of the logistics to SCCL. We sought to clarify where exactly accountability lies across the different aspects of the programme. For example, the Department confirmed that resolving the 176 contracts in dispute will …

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Prior to the COVID-19 pandemic there were not many businesses in the UK that specialised in producing PPE with most of it coming from overseas. The pandemic saw steep rises in global prices for PPE as demand for it surged throughout the world. As part of its initial pandemic response, …

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The Department set out in its initial PPE strategy its desire to build on this UK manufacturing base, reiterating the role it should play in building a more resilient supply chain and also the wider benefits including job creation and making the UK a centre for innovative products.66 It is …

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